Multiple Dividend Payouts


#1

Hello!

I’m new to investing, but especially new to investing in SG.

When looking at the dividend information for Suntec REIT (SGX:T82U), there are two “OrdinaryDividend” lines:

|31 Jul 2018 |29 Aug 2018 |OrdinaryDividend |SGD 0.01773 (0.95%)|
|31 Jul 2018 |29 Aug 2018 |CapitalDistribution |SGD 0.00375 (0.20%)|
|31 Jul 2018 |29 Aug 2018 |OrdinaryDividend |SGD 0.00326 (0.17%)|

What does this mean? I haven’t seen them broken down to this detail before, so I’m not sure how to interpret this. Is it safe to ignorantly assume that this detail doesn’t really matter, and I would get all three payments at once?

Thanks!
-will


#2

hi will,

this is normal.
you will get all 3. the breakdown is because this is how the REIT distributes their divs.
you’ll see 3 transactions in your bank account when they bank in the divs.

so far the REITs that i hold, all have similar breakdown so i suppose this is a norm.


#3

Hi will,

Yup this is normal, and they actually do break it down into such levels of details every time.

If you go and refer to the SGX announcement with regards to this particular payout, you will see the line stating:
“Suntec REIT has announced a distribution of 2.474 cents per unit in Suntec REIT (“Unit”) for the period of 1 April 2018 to 30 June 2018 (the “Distribution”), comprising a taxable income component of 1.773 cents per unit, a tax-exempt income component of 0.326 cents per unit and a capital distribution of 0.375 cents per unit.”

So in your CDP-linked bank account, you will get three payments rather than one, but it doesn’t matter, because you will still get the 2.474 in total.

Cheers


#4

Hi guys,

Thanks very much for the replies!

comprising a taxable income component of 1.773 cents per unit, a tax-exempt income component of 0.326 cents per unit and a capital distribution of 0.375 cents per unit.

Ah, I was thinking it was something along these lines (I vaguely remember I saw this breakdown when I first started). Does the tax-exempt status apply to us as the investor, or does it only matter to the REIT? I was looking at https://www.iras.gov.sg/irashome/uploadedFiles/IRASHome/e-Tax_Guides/etaxguide_Income%20Tax%20Treatment%20of%20Real%20Estate%20Investment%20Trusts%20and%20Approved%20Sub-Trusts.pdf, page 14, seems to indicate that we as the investors would only pay taxes on the “taxable income component”, since the other two parts already had taxes applied.

Thanks!
-w


#5

The relevant table is shown in section 8.3. You are included as “Other Individuals” and not subject to taxation on any of the three types of distributions mentioned.

Other entities such as companies are subject to taxes on income derived from REITS, which is why the payments are split.

Page 14 referes to INCOME TAX TREATMENT OF AN APPROVED SUB-TRUST OF A REIT. You are most probably not a sub-trust and so this does not apply to you.

Provided the REIT meets the requirements, the distributions it makes are not subject to taxation at the REIT level. This is stated in section 2.1

"The Comptroller of Income Tax (“CIT”) will accord tax transparency treatment
to a REIT on the specified income distributed by the trustee, subject to certain
conditions. The specified income will not be taxed in the hands of the trustee
of the REIT, but will only be taxed in the hands of the unit holders, unless the
unit holders are specifically exempted from tax."


#6

The relevant table is shown in section 8.3. You are included as “Other Individuals” and not subject to taxation on any of the three types of distributions mentioned.

Oh wow. Yeah, I saw that too, but it is hard to believe I wouldn’t be taxed on income! :slight_smile: Thanks for the info