General Category > Shares

Can you be both a trader and an investor (tax wise)

(1/2) > >>

JhbMaverick:
If I were to have 90% of my portfolio in a passive investment, ie. unit trusts or ETFs, and trade with the remaining 10%, what will happen come tax season?

Obviously I'll trade before the 3 year rule for investing, but would any capital gains on my passive portfolio be added to income as would happen with trading gains?

Krypt0n1te:
I'm pretty sure you will have more than a valid point to prove to SARS that you're an investor and should be taxed at CGT rates if they accidentally tax your profits at marginal tax rates after holding the shares more than 3 years.

Just don't toss away that 10% and then start nibbling away at that 90% investment.
Sure it's fun to trade, but I think there is very very very little traders outperforming investors if you take ALL costs, taxes and time in consideration.

gcr:
This is a general question to which I welcome some insights
My portfolio as it stands currently is treated as an investor portfolio upon which I pay CGT on profits at time of sale.
I recently attended a seminar on SSF's (have been on such seminars on CFD but am not interested in these instruments) and am contemplating looking at SSF's as a trading/investment option. I have raised the question of tax with the presenter specifically in that I wanted SARS to treat my 2 portfolios separately. Thus all activity over SSF's would be treated as income and I would be taxed accordingly, but I don't want this income to be aggregated with my pension and thus push me up into a new tax bracket and thus pay more tax. He suggested that to not get the income from SSF's aggregated with my pension that I may have to open up a company account and thus income would be subject to company tax rules. If I read reports on opening company accounts and the red tape and nonsense that goes with it, it seems a daunting task.
So my question is - is there anyone on the forum who has managed to get SARS to partition their share activity into investment and trading but with minimal tax implications.
Should nobody have managed to achieve this, then my next port of call would be to write to them with a scenario, and ask them for input on how this can best be done, and what their suggestions would be - would also be willing to have meetings with SARS in need to get a clear understanding of what the rules would be. My biggest concern being that you go down a path only to find that it doesn't work like that and you can never get back to the original situation
Please feel free to comment - on the basis that I don't have the answers       

Orca:
Very simple. You buy 2 houses. One you live in and the other is a fix me up. You fix. You sell for profit. Buy another fix me up and do the same. Sell for profit. This 2'nd house becomes a business as you derive income yearly from it.
Tax year end comes and you must add ALL profit made from the trading house to your income. The primary home has increased in value but you have not sold it yet so no tax.
After +- 3 years you sell your primary home at a profit. Now you pay CGT on the profit at 33.3% after deducting R30k exclusion. This amount you add to your income.

Works the same with investing and trading. KEEP YOUR 2 ACCOUNTS SEPARATE. Makes it easier.

I must add that with primary residence, the first R2M is not taxable. Not so with investments.
Am I correct? 

jaDEB:
I have read and heard about tax on shares, and I must say Orca, your explanation is the best and easiest to understand.

Thanks.

 8)

I believe you must also be honest with the taxman, that is very important.

PS.

a good liar has to have a good memory, and mine sucks.  ??? - lol I dig this okes nervous twitch, it's just like mine looool

Navigation

[0] Message Index

[#] Next page