Written by Nicci
Posted 30 April 2025
Shares represent ownership in a company. When you buy shares, you become a shareholder — meaning you own a small part of that company. Companies issue shares to raise money, and in return, investors get a chance to benefit from the company’s growth and profits.
There are two main ways to make money from shares:
Tax Consequences in South Africa
In South Africa, shares are taxed in two main ways:
Dividends Tax: If you receive local dividends, there's a 20% tax withheld before the money reaches you. You don’t need to do anything – it's handled by the company or investment platform. Once you receive the dividend, it is exempt from further tax because the dividends tax has already been withheld. This is why you declare the local dividend in the non-taxable section of your tax return.
Capital Gains Tax (CGT): If you sell your shares for more than you bought them, the profit is a capital gain. Individuals get an annual exclusion (R40,000 for the 2024/2025 tax year), and only 40% of any gain above the exclusion is included in your taxable income. You would need to declare the details of your disposal in the Capital Gains section of your tax return. For further details, please click here.
If you are a taxpayer filling in the Assets and Liabilities section of your tax return (ITR12), shares are classified as an asset. You need to report how much you paid for the shares (i.e the cost price), NOT what they are worth today.
Final Thought
Shares can be a great way to grow your wealth over time, but they come with risks and tax responsibilities. Always consider speaking to a financial advisor before investing.
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