Share Forum - Discuss JSE shares and join the Investor Challenge

Quote from: Mr_Dividend on February 08, 2016, 04:32:58 pm

Quote

A disadvantage of holding Deutsche Bank MSCI World in a TFSA account is you do not get the full benefit of not having to pay government’s 15% dividend withholding tax.

Deutsche Bank’s response to my question on how dividend withholding tax worked on its range of blue-chip exchange-traded funds (ETFs) was: "Section 64 (n) of the Income Tax Act provides for a rebate to be deducted from the local dividends tax payable in respect of a foreign dividend if that dividend was subject to foreign tax."

As far as I understand that, it means the dividend taxes are already deducted in the US or wherever, so you do not get as much tax savings from holding them in a TFSA as you would by escaping the full 15% tax on dividends from local companies.

Aside from the tax issues, the MSCI World tracker is not particularly attractive from a dividend perspective since its dividend yield is only about 1.7%, placing it fairly low when ranking ETFs by their dividend or interest payouts.

There we go, clear as mud. Might have to get some one to compare the dividends received in and out of the TFSA.

http://www.bdlive.co.za/opinion/columnists/2015/08/27/how-to-find-your-perfect-tax-free-saving-fund

Pretty clear indeed. Thanks for that. It changes my allocation, now I will only hold SA ETFs in my TFSA. I already have an interactive brokers account, and will hold VWRD in there instead. The TER is lower at only 0.25% and I'll only be paying +- 11% divvie tax. No point in paying 0.67% TER when there's no tax advantage.

When and how do you get the 15% tax back in your TFSA that was withheld at source?

ASHMID 2.75 cents - LDT: 2016-07-04

PTXTEN 32.39101 cents - LDT: 2016-09-28

PTXTEN 27.68213 cents - LDT: 2016-04-04

As a minimum I would recommend you follow the 7 baby step plan by Dave Ramsey (modified for SA).

1. Build your starter emergency fund (1 months' expenses in a savings account)
2. Pay off all your debt except the bond on your house (if you have one).
3.a) Finish your emergency fund by saving 3 to 6 months' worth of expenses.
3.b) Save toward your house deposit, minimum 10% down, 20% ideally. Don't spend more than 25% of your after tax income on the bond payment.
4. Contribute 15% of your income to your "pension fund" (25% satrix top40, 25% DBX world, 25% RMB midcap, 25% div trax). Preferably ETFs in ABSA ETF only account.
5. Save for your kids university (if you have kids)
6. Pay off your house
7. Invest and give to people less fortunate.

I have been following these steps since 2008 and so far it has worked really well for me. I have been on step 7 now for just over a year.

I was hoping to see some international small or mid cap ETFs. Looks like I will have to wait a bit longer then. The global developed markets property ETF seems interesting.

Quote from: jaDEB on April 06, 2016, 09:03:40 am

Sorry to be so negative, but Bob has been ruling for how long in Zim?

Our constitution (which the ANC trash at will) stipulates that you may not serve more than 2 terms as president - Mbeki want a third term and tried to have the constitution changed but was thwarted in his attempts.

The real travesty of Zuma continuing is that if he is not impeached he will get all his wonderful pensions and security detail and free flights all over the world.

In addtion to his R4mil a year salary paid by the taxpayer.