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1) For the purposes of this section—

"connected person" means a connected person as defined in section 1, provided that the expression 'and no shareholder holds the majority voting rights of such company' in paragraph (d)(v) of that definition shall be disregarded;

"equity share" includes a participatory interest in a portfolio of a collective investment scheme in securities;

"qualifying share", in relation to any taxpayer, means an equity share, which has been disposed of by the taxpayer or which is treated as having been disposed of by the taxpayer in terms of paragraph 12 of the Eighth Schedule, if the taxpayer immediately prior to such disposal had been the owner of that share for a continuous period of at least three years excluding a share which at any time during that period was-

     a) a share in a share block company as defined in section 1 of the Share Blocks Control Act, 1980 (Act No. 59
         of 1980);

     b) a share in a company which, was not a resident, other than a company contemplated in paragraph (a) of
         the definition of "listed company"; or

     c) a hybrid equity instrument as defined in section 8E.

 

2) Any amount other than a dividend or foreign dividend received by or accrued to a taxpayer in respect of a
qualifying share shall be deemed to be of a capital nature.

 

2A)Subsection (2) does not apply in respect of so much of the amount received or accrued in respect of the disposal
of a qualifying share contemplated in that subsection as does not exceed the expenditure allowed in respect of that share in terms of section 12J(2).[Venture capital exclusion]

 

3)The provisions of this section shall not apply to any qualifying share if at the time of the disposal of that share the
taxpayer was a connected person in relation to the company that issued that share and-

a)more than 50 per cent of the market value of the equity shares of that company was attributable directly or
indirectly to immovable property other than—

i)immovable property held directly or indirectly by a person that is not a connected person to the
taxpayer; or

ii)immovable property held directly or indirectly for a continuous period of more than three years
immediately prior to that disposal; or

b)that company acquired any asset during the period of three years immediately prior to that disposal and
amounts were paid or payable by any person to any person other than that company for the use of that asset while that asset was held by that company during that period.

 

4)For purposes of this section, where—

a)any share has been lent by a lender to a borrower in terms of a securities lending arrangement, such
share shall for the purposes of the lender be deemed not to have been disposed of by the lender; and

b)any other share of the same kind and of the same or equivalent quantity and quality has been returned by
the borrower to the lender, such share and such other share shall be deemed to be one and the same share in the hands of the lender.

 

5)There shall in the year of assessment in which any qualifying share is disposed of by the taxpayer be included in
the taxpayer's income any expenditure or losses incurred in respect of such qualifying share and allowed as a deduction from the income of the taxpayer during that or any previous year of assessment in terms of section 11. Provided that this subsection must not apply in respect of any expenditure or loss to the extent that the amount of that expenditure or loss is taken into account in terms of section 8(4)(a) or section 19.

 

6)Where the taxpayer holds identical shares in the same company which were acquired by the taxpayer on
different dates and the taxpayer has disposed of any of those shares, the taxpayer shall for the purposes of this section be deemed to have disposed of the shares held by the taxpayer for the longest period of time.

 

7)The provisions of section 22(8 ) shall not apply as a result of the disposal of any qualifying share.

 

8)For the purposes of this section, where a company issues shares to a person in substitution of previously held
shares in that company by reason of a subdivision, consolidation or similar arrangement or a conversion contemplated in section 40A or 40B, such share and such previously held shares shall be deemed to be one and the same share if—

i)the participation rights and interests of that person in that company remain unaltered; and

ii)no consideration whatsoever passes directly or indirectly from that person to that company in relation
to the issued shares.

 

Subsection (1) comes into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.

The provision in the Act seems to post-date most of the court rulings.

Now that first calculation was based on R350k withdrawals py. As you age, the less you spend. If I were to stay in SA then my circumstances would warrant a R18 000 pm withdrawal or R216 000 py. The divies will be an extra bonus.

Started with R667K and made 200% gains then retired. You will now have R2m.

The R667K bought you 20 000 shares in ABC.

R667 000.00/20 000 = Base Cost of R33.35 ps

Now your R2m will have a market value of R2m/20 000 shares = R100

Sell 2160 shares at R100 ps = R216 000

Cost price of 2160 shares at R33.35 = R72 036

Gain is R216 000 - R72 036 = R143 964

Tax = R14 474

Older than 65.

Tax = R8 084

From this you can deduct internet costs, a portion of your laptop cost and medical expenses. So on R18K pm plus divies you will pay less than R1 000 pm tax.

No Patrick. My calculations are correct. There is no CGT if you withdraw monthly. It is income and tax is paid at your tax margin as revenue.
You are retired and withdraw monthly for income. It will not be CGT.

I think the crux of the matter is does a "qualifying share" (section 9C) override the other factors in determining if a disposal is of a capital or income nature.  A job for some tax expert to explain to us.

In simple terms Section 9C is the "three year holding period law"

And bear in mind that this is brand new law! 

Quote from: act

Subsection (1) comes into operation on 1 January 2013 and applies in respect of years of assessment commencing on or after that date.

I don't see, or can't find, any changes when compared to the pdf attached. Section 4.1. What exactly is 'the brand new law' ?

I disagree. My last calculation is correct.

Despite guidelines laid down by case law, the determination of whether the amount received or accrued on the disposal of a share falls on capital or revenue account is often a contentious matter which can lead to costly and protracted legal disputes.

As this directly affects me, I have done much research on it. The wording of these "laws" are such that only a court can decide what they actually mean.
Farmer vs SARS. Farmer has had his farm for 35 years and decides to divide his farm into plots and sell them individualy. The court found that his intention was for profit. So his gains were taxed as income.
The sale of your shares for an income will be considered as revenue.

The fact that if you are withdrawing money other than divies monthly as an Income then it is INCOME. You will be taxed as Income revenue and not CGT. You are holding your shares for income.

If by 'withdrawing' you mean selling i.e. a disposal, and the share(s) sold are regarded as 'qualifying shares' (see yossarian's reply #16), then the disposal will be regarded as being of a capital nature, even if the share(s) disposed of were designated as being trading stock.

Section 9C draws no distinction between a share-dealer who carries on a distinct business of buying and selling shares for profit and a person who invests in shares as a long-term investment but speculates in some shares from time to time. The holding of shares by a share-dealer or the occasional speculator for at least three continuous years converts the amount derived on disposal from income to an amount of a capital nature. Amounts previously allowed as a deduction (for example, opening stock or interest on monies borrowed to buy shares) must be recouped on disposal of the shares and a capital gain or loss determined as if the shares had been held on capital account from the date of acquisition. Both categories of persons are subject to section 9C and do not have an option to elect out of the provision in order, for example, to claim revenue losses on shares held for three years or longer.
In the year of acquisition a share-dealer will be entitled to claim the cost of acquisition

The purpose of 9c is to provide clear guidelines - 3yrs. is the determining factor.