By Chris Herbst, Chartered Business Accountant in Practice (CBAP) with CIBA, General Tax Practitioner (GTP) with SAIT, Stellenbosch University. Team registered with SAIT, SAIPA and CIBA.
More South Africans now hold offshore shares, global ETFs and foreign bank accounts, often through a local platform that buys the investments for them. Each year the income from those holdings lands on the ITR12 under a handful of four-digit source codes, and the two that cause the most questions are 4216 and 4218. This guide explains what each code means, how SARS taxes the amounts behind them, how foreign tax credits work, and how to check the figures on eFiling before you submit.
What Is SARS Code 4216?
SARS code 4216 is "Gross foreign dividends subject to SA normal tax". It carries the rand value of dividends you received from foreign companies that are not exempt under the Income Tax Act. The SARS Comprehensive Guide to the ITR12 (IT-AE-36-G05) lists it in the investment income section of the return, next to 4112 for the foreign tax credits on those dividends.
Where does code 4216 appear?
You see 4216 in three places: on the tax certificate your platform or broker issues, on the investment income section of your ITR12, and on your ITA34 notice of assessment once SARS has assessed the return. The amount on the return is the gross dividend before any foreign tax was withheld.
Is code 4216 prepopulated on eFiling?
Yes, where the institution sent third-party data to SARS. From the 2020 year of assessment SARS auto calculates the 4216 total from the amounts per institution, and you add any institution that is missing with the Add button, according to the ITR12 guide.
What Is SARS Code 4218?
SARS code 4218 is "Foreign interest". It holds interest you earned from a source outside South Africa, such as an offshore bank account, a foreign money market fund or foreign bonds. Foreign tax withheld on that interest goes next to code 4113.
Does the interest exemption cover code 4218?
No. The annual interest exemption of R23 800 (under 65) and R34 500 (65 and older) applies to interest from a South African source only, as the SARS interest and dividends rates page states. Foreign interest under 4218 is taxed in full at your marginal rate.
Can I deduct expenses against foreign interest?
The ITR12 has a field for allowable interest expenses incurred in producing interest, which the ITR12 guide says is used for expenses related to foreign interest (4218). The expense must have been incurred to earn that interest, for example interest on a loan used to make the deposit.
How Are Foreign Dividends and Foreign Interest Taxed Differently?
Foreign dividends are partly exempt and foreign interest is fully taxable. SARS states that most foreign dividends received by individuals from foreign companies, where you hold less than 10% of the company, are taxed at a maximum effective rate of 20%, and that no deductions are allowed for expenditure to produce them.
- What it is: Code 4216: Foreign dividends; Code 4218: Foreign interest
- Exemption: Code 4216: Section 10B(3) ratio; Code 4218: None
- Top effective rate: Code 4216: 20%; Code 4218: 45%
- Expenses: Code 4216: Not deductible; Code 4218: Interest expense field
- Foreign tax credit code: Code 4216: 4112; Code 4218: 4113
How does the section 10B(3) exemption work?
Section 10B(3) of the Income Tax Act 58 of 1962 exempts a fixed portion of a taxable foreign dividend, so that only part of it is added to your taxable income. SARS applies the exemption programmatically, so you declare the full gross dividend under 4216 and never reduce it yourself. At the top marginal rate of 45% on the SARS rates of tax for individuals, the exempt portion leaves an effective rate of 20%, matching the rate SARS publishes.
Which foreign dividends are fully exempt?
Section 10B(2) of the Income Tax Act exempts certain foreign dividends in full, for example where you hold at least 10% of the equity shares and voting rights in the foreign company. Dividends on foreign shares listed on the JSE are handled through dividends tax rather than through 4216. Your certificate shows whether an amount was reported as a taxable foreign dividend.
What rate applies to foreign interest?
Foreign interest is added to your taxable income and taxed at your marginal rate on the SARS tables, from 18% up to 45%. For the full brackets and rebates, see our guide to the Budget 2026 tax tables.
How Do Foreign Tax Credits Work on Codes 4112 and 4113?
A foreign tax credit reduces your South African tax by the foreign tax already withheld on the same income, so the income is not taxed twice in full. Section 6quat of the Income Tax Act provides the rebate, and the ITR12 guide places it next to 4112 for dividends and 4113 for interest.
Is the foreign tax credit limited?
Yes. The ITR12 guide states that the credit is limited to the South African tax payable on the foreign income, using the formula foreign taxable income multiplied by normal tax payable, divided by total taxable income. Foreign tax above that limit is not refunded by SARS.
Can I claim 4112 without declaring 4216?
No. The ITR12 guide states that you can only claim foreign tax credits on foreign dividends (4112) if you have declared foreign dividend income (4216) greater than zero.
What proof does SARS accept for foreign tax?
Where tax was withheld at source, SARS accepts the original document issued by the institution. Where tax was not withheld, it accepts an assessment or receipt from the foreign tax authority, according to the ITR12 guide. Keep these with your records in case of a SARS verification.
How Do You Convert Foreign Income to Rand?
Every amount on the ITR12 is in rand. Section 25D of the Income Tax Act requires foreign amounts to be translated to rand, and a natural person may elect to use the average exchange rate for the year of assessment instead of the spot rate on each date. Use one method consistently for the year.
Does my platform convert the amounts for me?
Most South African platforms that hold offshore investments for you issue a rand tax certificate, and the prepopulated figures on eFiling come from that data. Where you hold an account directly with a foreign broker, you convert the amounts yourself.
How Do You Declare Codes 4216 and 4218 on eFiling?
You declare both in the investment income section of the ITR12, which opens once you answer the wizard question on investment income. These are the steps in order.
- Collect your certificates. Download the annual tax certificate from each platform, broker or bank, and see our checklist of documents needed to file your tax return.
- Open the ITR12 on eFiling. Go to Returns, Returns Issued, Personal Income Tax (ITR12), and open the return for the year.
- Answer the wizard. Mark that you received local or foreign interest or dividends, and mark the foreign tax credit question if foreign tax was withheld.
- Check the prepopulated lines. In the investment income section, compare each institution under foreign interest (4218, 4113) and foreign dividends (4216, 4112) with your certificate.
- Add what is missing. Use the Add button for any institution SARS has no data from, and enter the gross rand amounts.
- Delete what is not yours. Use the Delete icon next to an institution whose income belongs to someone else, as the guide allows.
- Submit and check the ITA34. After assessment, confirm that 4216, 4218, 4112 and 4113 on the ITA34 match what you declared. Our guide to reading source codes on your ITA34 shows how the notice is laid out.
What if the prepopulated amount is wrong?
The ITR12 guide tells you to contact the institution to correct the data and resend it to SARS. If the assessment is already issued with the wrong figure, follow the steps to dispute a SARS assessment.
How do spouses married in community of property declare 4216?
From the 2024 year of assessment, the ITR12 guide requires your own foreign dividends and interest and your spouse's share to be captured in separate sub sections of the return.
What Are the Common Mistakes With Foreign Dividends and Interest?
Most errors come from treating foreign income like local income. These are the ones we see most often.
- Applying the interest exemption to foreign interest. The R23 800 exemption covers South African interest only.
- Declaring the net dividend. Code 4216 takes the gross dividend before foreign withholding tax, and the tax withheld goes under 4112.
- Reducing the dividend for the exemption. SARS applies section 10B(3) itself, so a figure you reduced first has the exemption applied twice and understates your income, which SARS corrects when it reviews the return.
- Missing a direct foreign account. An account held directly offshore sends SARS no third-party data, so it is not prepopulated.
- Claiming expenses against dividends. SARS allows no deductions for expenditure to produce foreign dividends.
- Forgetting provisional tax. Large foreign income can make you a provisional taxpayer; see who should register for provisional tax.
- Confusing income with gains. Selling offshore shares is a capital gains event, not a 4216 dividend. Our guide to the tax on offshore investments covers the disposal side.
Why does my local certificate not show foreign income?
An IT3(b) from a South African bank lists local interest and dividends. Foreign income held directly offshore is reported by the foreign institution, if at all, which is why IT3(b) and IT3(c) certificates do not always cover everything you earned.
Who Has to Declare Codes 4216 and 4218?
South African tax residents declare codes 4216 and 4218. The ITR12 guide states that the foreign interest and foreign dividend sections apply to residents only, because a resident is taxed on worldwide income while a non-resident is taxed on South African source income.
Do I declare foreign income in the year I became resident?
Yes, from the date your residency started. Income that accrued to you before you became a South African tax resident is outside the resident return, and the ITR12 wizard asks for the date on which you became or reinstated residency so the return covers the right part of the year.
What if I hold the investment through a local unit trust?
A South African unit trust that invests offshore distributes to you as a local fund, and the distribution appears on the fund's South African tax certificate under the code the fund reports. Only income you receive from a foreign company or foreign account directly, or through a platform that holds the foreign asset in your name, goes under 4216 or 4218.
Do small amounts still need to be declared?
Yes. There is no minimum amount for foreign dividends or foreign interest, so even a small dividend from a single foreign share is declared. A missing amount that SARS later receives from a foreign institution leads to an additional assessment, plus interest on the tax underpaid.
What Records Should You Keep for Foreign Income?
Keep every document that proves the gross income, the foreign tax withheld and the exchange rate you used. SARS can ask for them in a verification or audit, and the ITR12 guide sets out what it accepts as proof of foreign tax.
- The annual tax certificate or income statement from each platform, broker or foreign bank.
- Dividend and interest statements showing the date, gross amount and tax withheld on each payment.
- The exchange rate source and method you used to translate each amount to rand.
- Any foreign tax return or receipt where tax was paid to the foreign authority directly.
Do You Need Help With SARS Code 4216?
Foreign dividends, foreign interest and the credits that go with them are where an ITR12 most often goes wrong, because the codes, the exemption and the rand conversion all interact. We check every certificate against the prepopulated data, declare 4216, 4218, 4112 and 4113 correctly and review your ITA34 afterwards. See our personal tax return pricing, read how to appoint a tax practitioner for your ITR12, browse the personal tax guides, or contact us to get started.
