HYPROP INVESTMENTS LIMITED - Tax treatment of the distribution

Tax treatment of the distribution

HYPROP INVESTMENTS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/005284/06)
JSE share code: HYP ISIN: ZAE000003430
(Approved as a REIT by the JSE)
(“Hyprop” or “the company”)



TAX TREATMENT OF THE DISTRIBUTION


Combined unitholders are referred to Hyprop’s unaudited interim results announcement for the six months
ended 31 December 2013, published on SENS on Friday, 21 February 2014, and in particular, the
notification of a distribution payment of 231 cents per combined unit (“the distribution”) referred to
therein, and are advised as follows:

In accordance with Hyprop’s status as a REIT, combined unitholders are advised that the distribution meets
the requirements of a “qualifying distribution” for the purposes of section 25BB of the Income Tax Act, No.
58 of 1962 (“Income Tax Act”). The distribution on the combined units will be deemed to be a dividend for
South African tax purposes, in terms of section 25BB of the Income Tax Act.

The distribution received by or accrued to South African tax residents must be included in the gross income
of such combined unitholders and will not be exempt from income tax (in terms of the exclusion to the
general dividend exemption, contained in paragraph (aa) of section 10(1)(k)(i) of the Income Tax Act)
because it is a dividend distributed by a REIT. This distribution is, however, exempt from dividend
withholding tax in the hands of South African tax resident combined unitholders, provided that the South
African resident combined unitholders provided the following forms to their Central Securities Depository
Participant (“CSDP”) or broker, as the case may be, in respect of uncertificated combined units, or the
company, in respect of certificated combined units:

a)   a declaration that the distribution is exempt from dividends tax; and

b)   a written undertaking to inform the CSDP, broker or the company, as the case may be, should the
     circumstances affecting the exemption change or the beneficial owner cease to be the beneficial
     owner,

both in the form prescribed by the Commissioner for the South African Revenue Service. Combined
unitholders are advised to contact their CSDP, broker or the company, as the case may be, to arrange for the
abovementioned documents to be submitted prior to payment of the distribution, if such documents have not
already been submitted.

Distributions received by non-resident combined unitholders will not be taxable as income and instead will
be treated as an ordinary dividend which is exempt from income tax in terms of the general dividend
exemption in section 10(1)(k)(i) of the Income Tax Act. It should be noted that up to 31 December 2013
distributions received by non-residents from a REIT were not subject to dividend withholding tax. From
1 January 2014, any distribution received by a non-resident from a REIT will be subject to dividend
withholding tax at 15%, unless the rate is reduced in terms of any applicable agreement for the avoidance of
double taxation (“DTA”) between South Africa and the country of residence of the combined unitholder.
Assuming dividend withholding tax will be withheld at a rate of 15%, the net distribution amount due to
non-resident combined unitholders is 196.35 cents per combined unit. A reduced dividend withholding rate
in terms of the applicable DTA, may only be relied upon if the non-resident combined unitholder has
provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated
combined units, or the company, in respect of certificated combined units:

a)   a declaration that the distribution is subject to a reduced rate as a result of the application of a DTA;
       and

b)   a written undertaking to inform their CSDP, broker or the company, as the case may be, should the
     circumstances affecting the reduced rate change or the beneficial owner cease to be the beneficial
     owner,

both in the form prescribed by the Commissioner for the South African Revenue Service. Non-resident
combined unitholders are advised to contact their CSDP, broker or the company, as the case may be, to
arrange for the abovementioned documents to be submitted prior to payment of the distribution if such
documents have not already been submitted, if applicable.

Combined units in issue at the date of declaration of distribution: 243 256 092
Hyprop’s income tax reference number: 9425177715.

21 February 2014


Sponsor

Java Capital

Date: 21/02/2014 08:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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