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Deemed Dividends

What are deemed dividends?

A deemed dividend from a trust is when a company pays money to a trust, and that payment is treated as if it were a dividend, even though no formal dividend was declared.

It usually applies when a trust connected to company shareholders receives a benefit from the company. SARS treats it as if the company paid a dividend to the shareholder.

This happens in special cases under South African tax law, to stop people from avoiding dividends tax by using trusts.