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FOUNTAINHEAD PROPERTY TRUST - Tax treatment of income distribution

Release Date: 10/04/2014 07:40
Code(s): FPT     PDF:  
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Tax treatment of income distribution

FOUNTAINHEAD PROPERTY TRUST
(A Collective Investment Scheme in property
registered in terms of the Collective Investment
Schemes Control Act No. 45 of 2002 and
managed by Fountainhead Property Trust Management Limited)
(Registration number 1983/003324/06)
JSE share code: FPT       ISIN: ZAE000097416
(Approved as a REIT by the JSE)
(“Fountainhead”)


TAX TREATMENT OF INCOME DISTRIBUTION


Unitholders are referred to Fountainhead’s unaudited interim results for the 6 months ended 28 February 2014,
published on SENS on 10 April 2014, wherein unitholders were advised of distribution no. 62 of 29 cents per
unit for the 6 months ended February 2014 (“the distribution”), and are advised as follows:

In accordance with Fountainhead’s status as a REIT, 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 units will be a dividend for South African tax purposes, in
terms 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 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 unitholders, provided that the South African resident unitholders provided the
following forms to their Central Securities Depository Participant (“CSDP”) or broker, as the case may be, in
respect of uncertificated units, or Fountainhead, in respect of certificated units:

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

   b) a written undertaking to inform the CSDP, broker or Fountainhead, 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. Unitholders are
   advised to contact their CSDP, broker or Fountainhead, 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 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 unitholder. Assuming dividend withholding tax will be withheld at a
rate of 15%, the net dividend amount due to non-resident unitholders is 24.65 cents per unit. A reduced
dividend withholding rate in terms of the applicable DTA, may only be relied on if the non-resident unitholder
has provided the following forms to their CSDP or broker, as the case may be, in respect of uncertificated units,
or Fountainhead, in respect of certificated units:

   a) a declaration that the dividend 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 Fountainhead, 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
   unitholders are advised to contact their CSDP, broker or Fountainhead, 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.

The distribution is payable to Fountainhead unitholders in accordance with the timetable set out below:
                                                                                                         2014
Last date to trade cum dividend:                                                          Wednesday, 30 April
Shares trade ex dividend distribution:                                                          Friday, 2 May
Record date:                                                                                    Friday, 9 May
Payment date:                                                                                  Monday, 12 May

Unit certificates may not be dematerialised or rematerialised between Friday, 2 May 2014 and Friday, 9 May
2014, both days inclusive.

Units in issue at the date of declaration of the distribution: 1162 709 748
Fountainhead’s income tax reference number: 3114/091/84/0P

10 April 2014


Sponsor

Java Capital

Date: 10/04/2014 07:40:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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