Author Topic: Tax  (Read 93639 times)

Orca

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Tax
« on: June 21, 2013, 06:17:33 pm »
Quote
Thread split from the investor challenge thread - Patrick

Now you pay tax on your gains as a Trader. Every cent that you gained will be added to any other income you have and be taxed accordingly.
Had you kept the stocks for 3 years, then only 25% of the gains will be added to your income and that is a BIG difference.

In this competition YOU are a fund manager and if you sell your clients stocks before the 3 year rule, they will be taxed as traders.

Moral of the story is: Pick long term stocks. Not trading stocks. This is after all an investment competition.
« Last Edit: July 01, 2013, 07:21:51 pm by Patrick »
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Patrick

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Re: Tax.
« Reply #1 on: June 21, 2013, 08:54:12 pm »
Now you pay tax on your gains as a Trader. Every cent that you gained will be added to any other income you have and be taxed accordingly.

This is the only thing that kept me from offloading all my shares last week. Are you already classed as a trader tgg or have you held your shares for long enough not to be seen as a trader?

As for the contest, next year you'd be able to decide whether you're a trader or investor.

Orca

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Re: Tax.
« Reply #2 on: June 23, 2013, 07:56:30 pm »
I have learned my lesson. If you sell, say R1M after a 50% gain and you are in the 40% tax bracket, you will pay an amount of R193 600 tax on your R500k gains after the R16k costs as it will be revenue.
Now as you probably do not have the extra cash on hand, you will withdraw the money from your cash account at your broker to pay SARS. This will leave you with R806 400 in your investment account. A loss of just under 20%.
If you expect the market will drop by more than 20%, then by all means, sell.

I will hold even though I know the VIX is high.
 
 
I started here with nothing and still have most of it left.

tgg78703

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Re: Tax.
« Reply #3 on: June 24, 2013, 10:37:44 pm »
I have learned my lesson. If you sell, say R1M after a 50% gain and you are in the 40% tax bracket, you will pay an amount of R193 600 tax on your R500k gains after the R16k costs as it will be revenue.
Now as you probably do not have the extra cash on hand, you will withdraw the money from your cash account at your broker to pay SARS. This will leave you with R806 400 in your investment account. A loss of just under 20%.
If you expect the market will drop by more than 20%, then by all means, sell.

I will hold even though I know the VIX is high.

Your sums and my sums don,t add to the same.

If I Sold R1m after a 50 % gain, it means I invested R666 666 + 50 % R333 333 = R1m. On the R333 333 I pay tax of say 40% R133 333 leaves me with a profit of R200 000. after I withdraw to pay the taxes it leaves me with 30% profit  and a sum of R866 666 to invest again after the market has dropped. I do not expect the market to drop by 20% , but certain shares maybe. But what I normally do is buy into a different share that is oversold and has potential. So i sold bil and lon, which I expect to have a bit of a correction and bought some aeg which I expect will recover somewhat.

I also have losses and make bad choices so, profits are sett off with losses, But in my situation the taxes are different, it all goes through a business, so the R133  333 is mine as well ;)

Orca

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Re: Tax.
« Reply #4 on: June 25, 2013, 11:26:09 am »
Sorry. That 50% was supposed to be 100%. Worked on my portfolio where CML has a 70%+ portion.

Fact remains that in my example, I loose 20%. In your example, you loose 13.33%.
I started here with nothing and still have most of it left.

tgg78703

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Re: Tax.
« Reply #5 on: June 25, 2013, 07:44:14 pm »
We don,t loose 20 or 13 %, that is our part to finance the powers that be  :'(

I am comfortable being a trader and follow the various market segments, If I was an investor, i would put my my money in a fund, either unit trust or maybe satrix ind. and just sit back and relax.

But the share market is my hobby, like riding bike is to some people

Bundu

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Re: Tax.
« Reply #6 on: July 01, 2013, 10:48:39 am »
I quote from the email sent by Patrick:

"Monthly tip courtesy of Orca:
Tax can eat up a huge part of your gains if you sell your shares (for a profit) within three years of purchase. The reason for this is that if you hold you shares for longer than three years and then sell, you'd only pay capital gains tax, which has a maximum percentage of 10%. "


AFAIK the 10% has been at 13.3% for the past two years.....
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

Patrick

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Re: Tax.
« Reply #7 on: July 01, 2013, 10:54:25 am »
Ah that number was my addition. I was under the impression that it was 25% of the capital gain would be added to your income. Meaning a max of 10%. Do you have a sars link?

Bundu

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Re: Tax.
« Reply #8 on: July 01, 2013, 01:38:51 pm »
Ah that number was my addition. I was under the impression that it was 25% of the capital gain would be added to your income. Meaning a max of 10%. Do you have a sars link?

http://pghaccountants.co.za/tax-budget-speech-summary-20122013/
and
http://www.moneywebtax.co.za/moneywebtax/view/moneywebtax/en/page34677?oid=65832&sn=Detail
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

Bundu

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Re: Tax.
« Reply #9 on: July 01, 2013, 02:20:54 pm »
Thanks for letting me know. That sucks on so many levels  :wall:

well, basically it means that where you previously got 75% of your growth tax free, you now only get 66.7% of your growth tax free when keeping your shares > 3 years
« Last Edit: July 01, 2013, 03:26:27 pm by Bundu »
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

Moonraker

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Re: Tax.
« Reply #10 on: July 01, 2013, 03:50:18 pm »
Thanks for letting me know. That sucks on so many levels  :wall:

well, basically it means that where you previously got 75% of your growth tax free, you now only get 66.7% of your growth tax free when keeping your shares > 3 years
The inclusion rate is 33.3%
Eg. Let's say after deducting the R 30.000.- annual exclusion applicable to capital gains (and losses),
you have R1000.- gain.
Then apply the 33.3% inclusion rate = R 333.-
That amount must be added to your taxable income.
If your marginal tax rate is 40% then your effective tax on the gain is 13.32%
If your marginal rate is 30% then your effective tax on the gain is 9,99%

Orca

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Re: Tax.
« Reply #11 on: July 01, 2013, 05:49:56 pm »
And if SARS sees you as a trader, then the R1000 gain will be added to your income with NO exclusion. If your marginal tax rate is 40% then your effective tax on the gain is 40%. Not so Moon?
I started here with nothing and still have most of it left.

Moonraker

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Re: Tax.
« Reply #12 on: July 01, 2013, 06:46:27 pm »
And if SARS sees you as a trader, then the R1000 gain will be added to your income with NO exclusion. If your marginal tax rate is 40% then your effective tax on the gain is 40%. Not so Moon?
Yes Orca, if you are a trader. If not then it is 13.32% if your marginal tax rate is 40%.

Orca

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Tax
« Reply #13 on: July 01, 2013, 07:06:19 pm »
Help Moon. Just got this email from SARS.

Dear Taxpayer

Taxpayers earning less than R250 000 a year may not have to submit a tax return this year

1 July marks the beginning of Tax Season. As from this date taxpayers can submit their Income Tax Return (ITR12) to the South African Revenue Service (SARS). The good news this Tax Season is that the annual income threshold for submitting a tax return has been raised from R120 000 to R250 000.

This means that any taxpayer earning R250 000 or less during a tax year (1 March to the end February the next year) may not need to submit an income tax return as long as they also meet the requirements listed below.
   ·    You earn a salary from only one employer (i.e. you get only one IRP5 or IT3A certificate)
   ·    You don’t have any other form of income (e.g. interest or rental income)
   ·    You don’t want to claim any tax deductions (e.g. medical expenses, retirement annuity contributions or business travel expenses).

And according to our records from last year you may be one of those taxpayers who no longer needs to submit a tax return to SARS! So if nothing has changed in your tax affairs since last year – and your income for the year is still under R250 000 – you don’t need to complete and submit a return this year.
I started here with nothing and still have most of it left.

Patrick

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Re: Tax
« Reply #14 on: July 01, 2013, 07:08:44 pm »
I got the same email, how about we move tax to it's own thread.