TSMC Raises Dividend to Record High! Tax Authority Highlights 'This Date' as Key for Inheritance Tax Rules

Taiwan Semiconductor Manufacturing Company (TSMC) has decided to raise its Q1 dividend from NT$6 to NT$7 per share, setting a new historical high for quarterly dividends. Over 2.55 million shareholders will benefit from this increase. Regarding whether dividends inherited from a deceased shareholder should be reported under estate tax or comprehensive income tax, the Ministry of Finance states that the key lies in whether the ex-dividend date of the stock occurs before or after the date of death.

The Northern Region Taxation Bureau of the Ministry of Finance explained that for stocks held by a deceased person, if the invested company distributes cash or stock dividends during the year of death, whether these dividends should be included in the total estate depends on the type of stock and the determination date. For different types of stocks left by the deceased, the criteria for determining whether the receivable dividends belong to the estate or the heir's income vary.

For listed, over-the-counter (OTC), or emerging stock market shares, the ex-dividend date serves as the benchmark. If the issuing company has already announced the ex-dividend or ex-rights date, and that date falls on or before the date of death, the right to receive dividends is considered established before the deceased's passing. For unlisted, non-OTC, and non-emerging market shares, the shareholders' meeting resolution date is used as the benchmark. If no ex-dividend date has been resolved, the dividend distribution date set by the shareholders' meeting resolution will serve as the benchmark.

Whether dividends belong to the deceased's estate or the heir's income hinges on the timing of the right acquisition relative to the date of death. If the benchmark date for any of the above stock types occurs on or before the date of death, the dividend is considered part of the deceased's estate and must be included in the estate tax declaration. If the benchmark date occurs after the date of death, the dividend is not considered part of the estate and instead belongs to the heir's income.

The tax bureau provided an example: suppose an investor holds TSMC shares, and the company plans to distribute a cash dividend of NT$7 per share. If the ex-dividend date falls before the date of death, the right to receive the dividend was established during the deceased's lifetime, so this dividend must be included in the estate total and declared under 'estate tax.' Conversely, if the ex-dividend date occurs after the date of death, the dividend is not considered part of the estate and must be included in the heir's annual comprehensive income tax return for the year it is received.

The bureau reminds taxpayers to confirm the benchmark date with the dividend-distributing company or the agent securities firm before filing estate tax returns, and to correctly distinguish whether the dividend belongs to the deceased's estate or the heir's income based on the above criteria, ensuring proper declaration in accordance with regulations.