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Dividends and capital gains tax

Dividends withholding tax and capital gains tax are different. A tax-free investment can change both. A trading profit may not be a capital gain at all.

Reviewed 29 October 2026 by the WiT Money editorial team. This is general information, not a recommendation from a named adviser.

Key points

  • Dividends tax in the site tax file is 20%. REIT distributions are not taxed the same way.
  • The individual annual exclusion stored for capital gains is R50 000, with a 40% inclusion rate.
  • Shares you buy and sell as a trade can be taxed as income, not as a capital gain.

A company declares a dividend. For many South African share dividends, 20% is withheld. You receive the rest. Inside a tax-free investment the return is not taxed while you stay inside the contribution rules. A retirement fund has its own tax rules on the way out. Do not assume every distribution is a dividend. Real estate investment trusts are taxed differently.

A capital gain is the proceeds minus the base cost, when the amount is actually a capital gain. For an individual in the 2027 year of assessment, the tax file uses an annual exclusion of R50 000 and includes 40% of the gain above that. Tax is then at your marginal rate. The maximum effective rate stored alongside that rule is 18%, which is 40% of the top 45% bracket. A primary residence has a further exclusion this calculator does not apply. These figures were checked with the Budget 2026 tax guide on 28 October 2026.

An illustration

A R200 000 capital gain uses R50 000 of exclusion. Forty percent of the remaining R150 000 is R60 000 included in taxable income. At a 31% marginal rate the tax is R18 600. That is the calculator's arithmetic. It is not your assessment. Companies and trusts use different inclusion rates.

Not every profit is capital

If you buy and sell shares often enough that SARS regards it as a trade, the profit can be income. This page cannot classify your activity. When in doubt, read the SARS guide or ask a tax practitioner. Do not rely on a broker's marketing line.

Questions readers ask

Does the exclusion apply every year?

The annual exclusion is an annual rule for that year of assessment. It is not a lifetime allowance. Confirm the year before you use an old article.

Related

Sources

Page updated 29 October 2026. A source date is the day WiT Money checked that page, not a promise the institution has not changed it since.