Snapshot of new withholding tax on interest (WTI) – Are you liable?

High net worth individuals who hold local and foreign investments may not be aware of the new withholding tax on interest (WTI) introduced by SARS.

WTI is a tax charged on interest paid on or after 1 March 2015 by any person to or for the benefit of a foreigner from a source within South Africa.

In this new procedure the foreigner will be responsible for the tax, whilst the person making the interest payment will be responsible for withholding the tax. The interest paid is taxed at a final tax rate of 15%.

The return submitted to SARS is called the WTID (Withholding Tax on Interest Declaration) and WTI payments can only be made via the SARS electronic e-filing system.

The WTI payment is due before the end of the month, after the month in which the interest was paid. If the last day of the month is a public holiday or weekend, the payment must be made on the last business day before. It is the responsibility of the withholding agent to submit the electronic payment together with a WT002 return.

WTI submissions have to be made half-yearly. Submission for the first six months (1 March to 31 August 2015) are due on 31 October 2015 and for the second six months (1 September 2015 to 29 February 2016) by 31 May 2016.

Finally, a reconciliation submission of all WTI payments must be made for the year as well as an IT3(b) certificate of Income from Investments, Property Rights and Royalties must be completed and given to both the foreigner and SARS.

There are a few exemptions relevant to WTI and individuals are advised to consult their tax practitioner for details of these. Full guidelines for the submission of WTI certificates were also available on the SARS website.