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#21 orca

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Posted 15 December 2014 - 11:40 AM

The procedure is like this. Once you officially emigrate via SARS and SARB, your bank takes control of all your assets and blocks your bank account. All transactions can only move via this blocked Rand account by email instruction.
The bank notifies the broker who then closes the account by "selling" everything and then "repurchases"the same stocks in a new blocked non resident account. This attracts no fees as it was virtual transactions.
The IT3B will show these sales.
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#22 gamma

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Posted 15 December 2014 - 09:59 AM

Just out of interest Orca, was the advice you received that you needed to dispose of your holding upon emigrating?

 

 

 


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#23 longterm413

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Posted 15 December 2014 - 09:22 AM


If you can show you never intended to sell and that it was forced due to emigration I'm sure that will allow you to successfully argue for CGT despite < 3 years.

BTW, I don't believe you needed to sell in the first place, unless you needed to raise the 10%, in which case you could sell that portion only?


Just to add on to what gamma said, there is no specific section in the income tax act that mentioned the 3 year rule, it is part of the guidance issued by SARS, therefore, one does not necessary have to apply to it.

If SARS queries it, one can apply section 82 which states that the onus is on you, as a taxpayer, to prove that it is of capital or revenue in nature. The most important factor to discharge this onus is to look at the intention at the date of acquisition and whether there has been any change in intention subsequently.

The ball is in your court ;)

Section 9C specifies the 3 year rule, which specifies that disposal of shares held for 3 years is automatically taxed as a capital gain rather than income. The converse does not necessarily apply if you hold for less than 3 years, as long as your intention upon acquisition was for them to be capital in nature and there has been no change in intention up until and on date of sale. As your sale does not amount to a change in intention because you are selling due to immigration rather than to make a quick profit, your disposal should be taxed as capital in nature. It is important to note that onus is on the taxpayer to prove the disposal is capital in nature, therefore you need to provide an argument using capital v revenue case law (of which there is plenty) detailing my points raised above, rather than assuming SARS knows it's capital in nature.
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#24 PickApprentice

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Posted 15 December 2014 - 09:09 AM

If you can show you never intended to sell and that it was forced due to emigration I'm sure that will allow you to successfully argue for CGT despite < 3 years. 

 

BTW, I don't believe you needed to sell in the first place, unless you needed to raise the 10%, in which case you could sell that portion only? 

 

Just to add on to what gamma said, there is no specific section in the income tax act that mentioned the 3 year rule, it is part of the guidance issued by SARS, therefore, one does not necessary have to apply to it.

 

If SARS queries it, one can apply section 82 which states that the onus is on you, as a taxpayer, to prove that it is of capital or revenue in nature. The most important factor to discharge this onus is to look at the intention at the date of acquisition and whether there has been any change in intention subsequently. 

 

The ball is in your court ;)


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#25 gamma

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Posted 15 December 2014 - 08:24 AM

What are your thoughts on this?

I have officially emigrated and must pay exit tax. All my shares must be deemed as "sold" at market value at close the day before my departure. I am fine with this as my base cost will increase significantly.

What I'm not fine with is that I have only held the shares for 2,5 years and therefore they do not attract CGT but Income Tax according to KPMG as they are "Trading Stocks".

My tax at CGT will be R60k and at the income rate it will be R480k.

This has not yet been tested in the courts but I think it is unconstitutional as I loose my previous years exclusions and rebates. Also, my intent was to keep for the 3 year term as I can prove from my posts on forums from a year back.

 

If you can show you never intended to sell and that it was forced due to emigration I'm sure that will allow you to successfully argue for CGT despite < 3 years. 

 

BTW, I don't believe you needed to sell in the first place, unless you needed to raise the 10%, in which case you could sell that portion only? 


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#26 orca

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Posted 14 December 2014 - 09:45 PM

What are your thoughts on this?

I have officially emigrated and must pay exit tax. All my shares must be deemed as "sold" at market value at close the day before my departure. I am fine with this as my base cost will increase significantly.

What I'm not fine with is that I have only held the shares for 2,5 years and therefore they do not attract CGT but Income Tax according to KPMG as they are "Trading Stocks".

My tax at CGT will be R60k and at the income rate it will be R480k.

This has not yet been tested in the courts but I think it is unconstitutional as I loose my previous years exclusions and rebates. Also, my intent was to keep for the 3 year term as I can prove from my posts on forums from a year back.
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#27 orca

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Posted 07 July 2014 - 09:16 PM

Dominant helped me with my very complex tax prob but where is he now?

Most if not all tax involving IRP 5's are not queried but if you earn business profits from trading such as CFD's, you WILL get audited. 

No human mind is applied to wage earners tax. It is automated but if you earn your money outside of your wage income, then SARS

will want proof in the form of statements.

From my experience since 2008, when my trading got very complicated, SARS accepted my "accounting" that I am sure they actually never did as not even I did.

Now they still audit me but I get a letter stating that they accept my figures but reserve the right to reconsider. Whatever that means.

 

As to internet fees. I deducted my total Vodacom contract at R219.00 X 12 and it was accepted.


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#28 yusufm

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Posted 07 July 2014 - 04:53 PM

Interesting theory... and it would work if it wasn't for one thing... PAYE will get you before you get your salary. Your employer is forced to deduct PAYE directly from your salary and how you spend your salary after that is of no concern to SARS (mostly). The only place I believe this would work is if you are an active trader and have an account for this. You can then deduct your massive "loss" to your profits and end up paying your 15% divi tax indirectly and not the way more expensive income tax... in theory...

 

If this could actually work is most likely a totally different discussion

Yip PAYE would eliminate that, however, if I was my own business owner, a doctor, shopowner, etc I think it would work...

 

Are there any tax experts commenting on this thread by the way?


Edited by yusufm1, 07 July 2014 - 04:57 PM.

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#29 Jonny

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Posted 07 July 2014 - 04:47 PM

Guys I've also got a tax question if you care to help:

 

Say I earn R900 000 p.a. (for simplicity's sake) before deductions from my normal job and do no share trading. 

I would pay 269092 + 0.4*(900000-889614.5) = R273 246 in income tax and take home 900 000 - 273246 = R626 754 (assuming no medical aid, etc).

 

But say that I took the R900 000 and invested it in RNG,for example, at 450cps, received the 225c dividend and sold it ex-div at 450-225=225cps.

I would then have made R900 000 from my usual job, realised a loss of R450 000 on share trading (assuming no brokerage charges) and received a R450 000 dividend payment.

i would then pay income tax on 900 000 -450000 = R450 000 and dividend tax on R450 000. The income tax would be: R100 045 and the dividend tax would be 0.15*450 000 = R67 500. My total tax payment is thus 100 045+67500=  R167 545 and I would then take home 900 000 - 167 545 = R732 455.

 

(Note: I assumed I was able to buy R900 000 worth of RNG shares at exactly 450cps and that I was able to sell it at exactly 225cps when it goes ex-div. Also I excluded finance charges for simplicity).

 

So hypothetically, am I correct and is it therefore worth investing money in companies paying special divs to decrease my total tax payment?

Interesting theory... and it would work if it wasn't for one thing... PAYE will get you before you get your salary. Your employer is forced to deduct PAYE directly from your salary and how you spend your salary after that is of no concern to SARS (mostly). The only place I believe this would work is if you are an active trader and have an account for this. You can then deduct your massive "loss" to your profits and end up paying your 15% divi tax indirectly and not the way more expensive income tax... in theory...

 

If this could actually work is most likely a totally different discussion


Edited by Jonny, 07 July 2014 - 04:49 PM.

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My posts are my opinion and shouldn't be seen as investment advise from me or the view of the organisation I work for.

Do your own research before engaging in trades/investments  :)


#30 yusufm

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Posted 07 July 2014 - 04:37 PM

Be careful that the special dividend is in fact a true dividend based upon additional profits made and not a capital distribution which may be taxed differently. Any tax experts add to this input?

I think in the RNG example it's considered like an ordinary dividends (if you look at their last SENS it talks about the 15% dividend tax)


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#31 Bushwakka

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Posted 07 July 2014 - 04:36 PM

Beat me to it! :D


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#32 Saints

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Posted 07 July 2014 - 04:34 PM

Be careful that the special dividend is in fact a true dividend based upon additional profits made and not a capital distribution which may be taxed differently. Any tax experts add to this input?
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#33 fabes

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Posted 07 July 2014 - 04:34 PM

Great thx Fabes

 

 

Thanks to all

 

Pleasure. ;)


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#34 Bushwakka

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Posted 07 July 2014 - 04:33 PM

Yes I think you are correct in your assumption BUT you have just blown R450000 cash out of your bank account!

 

Maybe that response was a bit hasty. Ignored the fact that you get back the R450000 on the sale Plus the dividend of R450000.


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#35 yusufm

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Posted 07 July 2014 - 04:33 PM

e

You are correct as far as I understand tax. Sounds a bit messy though. From a theorectiical perspective it makes sense to do that cause you would end up making more money and paying less tax. As hooligan suggested below, it is advisable to trade through a company as the tax rate is less(28%). 

 

Have to carefully manage those positions though. 

Thanks fabes :) I will definitely look into trading through a company, will probably have to see a lawyer/CA. 

 

Yes I think you are correct in your assumption BUT you have just blown R450000 cash out of your bank account!

 

I haven't, the 450 000 will be received in dividends and the other 450 000 will be in stock sold


Edited by yusufm1, 07 July 2014 - 04:35 PM.

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#36 Bushwakka

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Posted 07 July 2014 - 04:24 PM

Guys I've also got a tax question if you care to help:

 

Say I earn R900 000 p.a. (for simplicity's sake) before deductions from my normal job and do no share trading. 

I would pay 269092 + 0.4*(900000-889614.5) = R273 246 in income tax and take home 900 000 - 273246 = R626 754 (assuming no medical aid, etc).

 

But say that I took the R900 000 and invested it in RNG,for example, at 450cps, received the 225c dividend and sold it ex-div at 450-225=225cps.

I would then have made R900 000 from my usual job, realised a loss of R450 000 on share trading (assuming no brokerage charges) and received a R450 000 dividend payment.

i would then pay income tax on 900 000 -450000 = R450 000 and dividend tax on R450 000. The income tax would be: R100 045 and the dividend tax would be 0.15*450 000 = R67 500. My total tax payment is thus 100 045+67500=  R167 545 and I would then take home 900 000 - 167 545 = R732 455.

 

(Note: I assumed I was able to buy R900 000 worth of RNG shares at exactly 450cps and that I was able to sell it at exactly 225cps when it goes ex-div. Also I excluded finance charges for simplicity).

 

So hypothetically, am I correct and is it therefore worth investing money in companies paying special divs to decrease my total tax payment?

 

Yes I think you are correct in your assumption BUT you have just blown R450000 cash out of your bank account!


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#37 fabes

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Posted 07 July 2014 - 04:23 PM

e

Guys I've also got a tax question if you care to help:

 

Say I earn R900 000 p.a. (for simplicity's sake) before deductions from my normal job and do no share trading. 

I would pay 269092 + 0.4*(900000-889614.5) = R273 246 in income tax and take home 900 000 - 273246 = R626 754 (assuming no medical aid, etc).

 

But say that I took the R900 000 and invested it in RNG,for example, at 450cps, received the 225c dividend and sold it ex-div at 450-225=225cps.

I would then have made R900 000 from my usual job, realised a loss of R450 000 on share trading (assuming no brokerage charges) and received a R450 000 dividend payment.

i would then pay income tax on 900 000 -450000 = R450 000 and dividend tax on R450 000. The income tax would be: R100 045 and the dividend tax would be 0.15*450 000 = R67 500. My total tax payment is thus 100 045+67500=  R167 545 and I would then take home 900 000 - 167 545 = R732 455.

 

(Note: I assumed I was able to buy R900 000 worth of RNG shares at exactly 450cps and that I was able to sell it at exactly 225cps when it goes ex-div. Also I excluded finance charges for simplicity).

 

So hypothetically, am I correct and is it therefore worth investing money in companies paying special divs to decrease my total tax payment?

You are correct as far as I understand tax. Sounds a bit messy though. From a theorectiical perspective it makes sense to do that cause you would end up making more money and paying less tax. As hooligan suggested below, it is advisable to trade through a company as the tax rate is less(28%). 

 

Have to carefully manage those positions though. 


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#38 Eagle eye

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Posted 07 July 2014 - 03:37 PM

Thanks to all

 


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#39 Godfather

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Posted 07 July 2014 - 01:58 PM

Great thx Fabes


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#40 yusufm

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Posted 07 July 2014 - 01:45 PM

Guys I've also got a tax question if you care to help:

 

Say I earn R900 000 p.a. (for simplicity's sake) before deductions from my normal job and do no share trading. 

I would pay 269092 + 0.4*(900000-889614.5) = R273 246 in income tax and take home 900 000 - 273246 = R626 754 (assuming no medical aid, etc).

 

But say that I took the R900 000 and invested it in RNG,for example, at 450cps, received the 225c dividend and sold it ex-div at 450-225=225cps.

I would then have made R900 000 from my usual job, realised a loss of R450 000 on share trading (assuming no brokerage charges) and received a R450 000 dividend payment.

i would then pay income tax on 900 000 -450000 = R450 000 and dividend tax on R450 000. The income tax would be: R100 045 and the dividend tax would be 0.15*450 000 = R67 500. My total tax payment is thus 100 045+67500=  R167 545 and I would then take home 900 000 - 167 545 = R732 455.

 

(Note: I assumed I was able to buy R900 000 worth of RNG shares at exactly 450cps and that I was able to sell it at exactly 225cps when it goes ex-div. Also I excluded finance charges for simplicity).

 

So hypothetically, am I correct and is it therefore worth investing money in companies paying special divs to decrease my total tax payment?


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