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Shares / Re: Selling your shares after 3 years.
« on: February 20, 2018, 04:49:34 pm »
Thanks that sort of confirms my thinking. 
This is something to ponder though:
So in the example above Johnny will pay tax as follows:
Taxable Income on R120k @ 18% = R21 600 minus primary rebate R13 635 = R7 965
plus DWT @ 20% (assuming locally taxed) = R10k
Income from sale of equity = R82k with a base cost of R75k results in a capital gain of 7k which is covered by the exclusion. If it's deemed to be revenue this gain will be added to the taxable income and taxed accordingly at marginal rate - in this case still 18%.
So assuming the CGT exclusion is allowed then the total tax bill will be R17 965
If the dividends were of foreign nature there's might be an exclusion ratio of 25/45 applicable which exempts a portion of the dividends from tax which could potentially reduce the total tax to R11 965
This is something to ponder though:
Quote
In my case where I was living off my investments from year 1, I had to pay normal income tax and not CGT until my 3 year holding term was reached then it converted to CGT. My effective tax was about 30%.Ideally one should not draw income from selling equity for the first 3 years if in any way possible - UNLESS the
So in the example above Johnny will pay tax as follows:
Taxable Income on R120k @ 18% = R21 600 minus primary rebate R13 635 = R7 965
plus DWT @ 20% (assuming locally taxed) = R10k
Income from sale of equity = R82k with a base cost of R75k results in a capital gain of 7k which is covered by the exclusion. If it's deemed to be revenue this gain will be added to the taxable income and taxed accordingly at marginal rate - in this case still 18%.
So assuming the CGT exclusion is allowed then the total tax bill will be R17 965
If the dividends were of foreign nature there's might be an exclusion ratio of 25/45 applicable which exempts a portion of the dividends from tax which could potentially reduce the total tax to R11 965
