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#41 fabes

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Posted 07 July 2014 - 01:43 PM

And if your intention was to keep but you sell to protect your capital and its less than 3 years?

Most on my Non CFDs I have invested in the hope to keep it for long term but either some bad news or I have identified a better oppurtunity

There are various tests by SARS. If you can prove your intention was to keep it for the long term and you sold it in less than 3 years, it will trigger CGT, however the burden of proof will be on you. There is a lot one have to take into account, but the general rule is under 3 years = revenue and over 3 years = capital gains.

 

You can download Tax guide for share owners from SARS website should you wanna read more.


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#42 Godfather

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Posted 07 July 2014 - 01:26 PM

And if your intention was to keep but you sell to protect your capital and its less than 3 years?

Most on my Non CFDs I have invested in the hope to keep it for long term but either some bad news or I have identified a better oppurtunity


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#43 fabes

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Posted 07 July 2014 - 01:23 PM

With CFDs you never own the share so you can never have this a capital gain or loss.

Is this correct?

 

Godfather you are sort of correct. It all depends how you look at it. If you hold a cfd for 3 years and dispose of it after 3 years, then SARS will consider a capital gain. Rule says less then 3 years, you are trading and more than that you are investing = capital gain.

 

Does SARS not have an incentive to motivate  JSE investments. Then are there min  limits to consider utilizing.And I enjoy Share Chat Friends thou I am new and not very active,. 

 

Nope eagle. atleast not that i know off.


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#44 Godfather

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Posted 07 July 2014 - 01:03 PM

With CFDs you never own the share so you can never have this a capital gain or loss.

Is this correct?


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#45 Eagle eye

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Posted 07 July 2014 - 10:19 AM

Does SARS not have an incentive to motivate  JSE investments. Then are there min  limits to consider utilizing.And I enjoy Share Chat Friends thou I am new and not very active,. 


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#46 fabes

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Posted 07 July 2014 - 10:18 AM

Fabes

 

Does your trading represent a decent % of your monthly/annual income?

I once declared a small gain on shares and the tax office did not know how to handle it. My accountant just ignored my smaller income from trading.

Going semi to full time is a different story.

 

If less than 20% re-consider your tax return....

Ben, thanks for your reply. I tend to agree with Hooligan about the penalties etc. I would rather not file a small loss than a small profit, because if you were to hit it big one year, SARS might audit you and expect you to pay for penalties and interest. 

 

My trading has been more than 20% of my income so I am obliged to make SARS happy. lol.


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#47 fabes

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Posted 07 July 2014 - 10:14 AM

This is pure income tax and should be classified so.

 

Usually I just skip the entire income statement and simply capture my profit/loss at the end.

Together with that attach your annual statement reflecting said net profit/loss and done.

 

This is technically incorrect but doing a full income statement confuses the hell out of the illiterates working for SARS, and so far it has worked fine for me.

 

BTW, trade through a company...and not your personal name. 

I would argue that you could still claim all expenses (brokerage, interest etc) in personal name under section 11 a - but this complicates things unnecessarily and SARS might finger you on this, especially claiming brokers fees :ph34r: and such.

 

Anyway, here is what I do - and I find it pretty tax effecient, whilst staying within the rules and keeping it "dumb" enough for SARS employee not to raise eyebrow and utter "Ehhhhh". <_<

 

Keep 2 accounts.

 

1. Long term portfolio in personal name (If you wondered why personal - due to cap gains annual exemption which is quite useful).  Just note, SARS are very strict on the 3 year rule...so easy on the selling in here.

2. Trade account in business name. (28% tax and deduct all expenses)

 

And if you are really a good sport like me, you leverage off the LTP, BUT borrow in the name of your company in #2 then you can deduct some more finance costs off those profits ;)

Thanks for the advice Hooligan. I agree 100% with you, but my problem was that you cannot directly input the profit/loss on efiling. I was thinking of using the funding from my bank account and the withdrawals to give me a profit or loss, but it's not necessarily correct.

 

I'm also a bit sceptical to deduct all my expenses like data, adsl, bank charges for transfers etc. cause although it is as clear as day for my trading, I would rather keep SARS happy by deducting the minimum and not fight with them about these charges. In a company, it is what it is.

 

I've had to seperate accounts for long term and trading, but have yet to do transfer my trading to a company. Definitely something I must do asap, cause the tax rate are much better.


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#48 Hooligan

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Posted 04 July 2014 - 06:19 PM

Fabes

 

Does your trading represent a decent % of your monthly/annual income?

I once declared a small gain on shares and the tax office did not know how to handle it. My accountant just ignored my smaller income from trading.

Going semi to full time is a different story.

 

If less than 20% re-consider your tax return....

Are you saying for example that if you make R1m a year and on top of that a cool R200k (20%) or so from trading it should be ignored and not declared?

 

This is not advisable - there is no such rule in the act.

If you get audited, you will pay tax on those un-declared profits plus hefty interest and penalties.


Edited by Hooligan, 04 July 2014 - 06:23 PM.

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#49 Hooligan

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Posted 04 July 2014 - 06:11 PM

Hi Guys

 

Quick question. You are considered to be trading if you trade ALSI or CFDs and not investing right? Therefore, you will file that under trading activities and not capital gains on efiling? The problem I have is how do one determine what your sales and proceeds are with futures, cause you buys contracts and not shares.

 

Spoke to SARS earlier and they don't know what futures trading is and advised me to put in under capital gains which I consider incorrect as the contracts are not kept for 3 years to be considered capital gains.

 

Any advice on how to complete my return?

This is pure income tax and should be classified so.

 

Usually I just skip the entire income statement and simply capture my profit/loss at the end.

Together with that attach your annual statement reflecting said net profit/loss and done.

 

This is technically incorrect but doing a full income statement confuses the hell out of the illiterates working for SARS, and so far it has worked fine for me.

 

BTW, trade through a company...and not your personal name. 

I would argue that you could still claim all expenses (brokerage, interest etc) in personal name under section 11 a - but this complicates things unnecessarily and SARS might finger you on this, especially claiming brokers fees :ph34r: and such.

 

Anyway, here is what I do - and I find it pretty tax effecient, whilst staying within the rules and keeping it "dumb" enough for SARS employee not to raise eyebrow and utter "Ehhhhh". <_<

 

Keep 2 accounts.

 

1. Long term portfolio in personal name (If you wondered why personal - due to cap gains annual exemption which is quite useful).  Just note, SARS are very strict on the 3 year rule...so easy on the selling in here.

2. Trade account in business name. (28% tax and deduct all expenses)

 

And if you are really a good sport like me, you leverage off the LTP, BUT borrow in the name of your company in #2 then you can deduct some more finance costs off those profits ;)


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#50 JJBen

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Posted 04 July 2014 - 04:38 PM

Fabes

 

Does your trading represent a decent % of your monthly/annual income?

I once declared a small gain on shares and the tax office did not know how to handle it. My accountant just ignored my smaller income from trading.

Going semi to full time is a different story.

 

If less than 20% re-consider your tax return....


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#51 fabes

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Posted 04 July 2014 - 03:53 PM

Hi Guys

 

Quick question. You are considered to be trading if you trade ALSI or CFDs and not investing right? Therefore, you will file that under trading activities and not capital gains on efiling? The problem I have is how do one determine what your sales and proceeds are with futures, cause you buys contracts and not shares.

 

Spoke to SARS earlier and they don't know what futures trading is and advised me to put in under capital gains which I consider incorrect as the contracts are not kept for 3 years to be considered capital gains.

 

Any advice on how to complete my return?


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#52 orca

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Posted 09 December 2013 - 09:59 AM

Didn't go they way I expected. Gave them a file for 2009/10/11/12 trading activities. The 2009 had that massive loss that I wanted to carry over.
Two weeks later I received a letter stating that the 2009 had prescribed and no further action allowed.
Then a month later, I received a letter stating that the "objections" for 2010/11/12 were "invalid".
Seems that they don't want my money.

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#53 davidp13

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Posted 09 December 2013 - 08:43 AM

My situation as we speak is this. Dumb me never disclosed my "trades" since 2007. I bought and sold at least 4 times a year.

That is Trading right? Thought that if you don't pocket the money then it is investing. Not so.

My accountant advised me that if I disclose my trades in the VDP ie Voluntary Disclosure Programme, my losses would not carry over.

I had a loss of R210k in 2009 during the crash. Now I can choose to loose this loss or not ask for the VDP.

If I don't ask for the VDP, the tax on my gains would double as penalties will be added.

I am now doing sums to see what is best for me as my stocks had increased substantially since the loss.

Hi Orca,

 

What was the outcome of this? 


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#54 orca

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Posted 08 December 2013 - 07:32 PM

A new problem. I have held my shares for 2 years and intend to go for the 3 year thingy. When I bought my stocks, I used the Weighted Average method.

Now after 2 years, I want to add a substantial amount to these same stocks and will apply the same Weighted Average Method for the base cost.

Will my 3 year thingy start all over again? Obviously I cannot change to FIFO now as I have been using W A for years. 

 

 


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#55 orca

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Posted 22 August 2013 - 07:54 PM

My situation as we speak is this. Dumb me never disclosed my "trades" since 2007. I bought and sold at least 4 times a year.

That is Trading right? Thought that if you don't pocket the money then it is investing. Not so.

My accountant advised me that if I disclose my trades in the VDP ie Voluntary Disclosure Programme, my losses would not carry over.

I had a loss of R210k in 2009 during the crash. Now I can choose to loose this loss or not ask for the VDP.

If I don't ask for the VDP, the tax on my gains would double as penalties will be added.

I am now doing sums to see what is best for me as my stocks had increased substantially since the loss.

 

 


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#56 gamma

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Posted 22 August 2013 - 07:40 PM

Joker, CGT is around 13% if you marg is 40%
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#57 ptomli

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Posted 22 August 2013 - 04:44 PM

It works the other way too  ;) 

 

To be honest though, I expect if you made a claim against a loss (in terms of income) actually incurred because you were rattled out of the market or some such, on a marker you'd actually bought for "investment" purposes, then you'd have some explaining to do.

 

I think the law is worded such that "intent at the time of purchase" is all important. And if you don't document that intent at that time, or don't act according to said intent, then SARS is going to apply whatever ruling it can such that you don't achieve a gain.

 

So, you buy XXX for long term investment, but it drops by 20% and you bail in fear before year three. You then enter that as a loss of income on your return and claim against it (however that works). I'd expect SARS to be fairly aware of such activity and you ought to expect a visit.

 

But I've never gone through that, so if someone has and cares to share, I'd also be interested.


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#58 joker

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Posted 22 August 2013 - 04:33 PM

I see what you mean. I think I understand this now. So how many traders are there on this site? Seems like a huge disincentive to hold for less than 3 years if you're going to lose 40% of the gains to tax, as opposed to the 10% on capital gains.


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#59 gamma

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Posted 22 August 2013 - 03:30 PM

So if I'm not mistaken, when declaring taxable amounts I could declare the sale's profit of a high performing share as a capital gain even if it's been held for less than 3 years. Then it's up to SARS to investigate if they want to disprove my claim and apply a marginal tax instead. Is that how it works? 

 

Except if they come a knocking then the onus is on you, not on them to prove it.

 

If you can not satisfactorily justify it then I would guess they could also hit you with penalties on the amount.


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#60 dominant

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Posted 22 August 2013 - 03:28 PM

So if I'm not mistaken, when declaring taxable amounts I could declare the sale's profit of a high performing share as a capital gain even if it's been held for less than 3 years. Then it's up to SARS to investigate if they want to disprove my claim and apply a marginal tax instead. Is that how it works? 

 

Yes, the law expects you to be honest when completing your return, and if you sneak a trade in under the capital gains section on the return, you probably won't get caught, although I don't recommend or endorse dishonesty.


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