Author Topic: Tax  (Read 100663 times)

Orca

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Re: Tax
« Reply #60 on: July 27, 2013, 04:35:10 pm »
Not difficult to find them. They are there but this is a tax thread. 8)
I started here with nothing and still have most of it left.

Orca

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Re: Tax
« Reply #61 on: July 27, 2013, 08:58:28 pm »
Will post my 60%+ stocks on the Long Term Portfolio thread.
I started here with nothing and still have most of it left.

Moonraker

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Re: Tax
« Reply #62 on: July 28, 2013, 02:39:11 pm »
While I'm on the subject of Donations Tax. A while back when I was more ignorant on tax matters, I thought I was clever by donating half my stocks to my wife to divide my tax burden. This can be done tax free and even my broker was about to transfer the stocks when I found out that it would not work.
According to SARS, any profits made on this donation will still be for my account. Not my wife's.
Yeah, it's a confusing matter. If you transfer assets to your spouse (shares included), you should in my opinion be subject to rollover relief. However be wary of this:
Quote
Transfers of assets between spouses for the purpose of tax avoidance may result in the capital gain or loss arising in the hands of the transferee spouse being attributed to the transferor spouse under para 68.
Check point 3 below:
Quote
[email protected]
1.What does roll-over mean and what assets disposed of are subject to roll-over relief?

Where assets are subject to roll-over it means that a CGT liability does not arise upon disposal but is rather deferred until a subsequent event to the extent that proceeds from the disposal are invested in a replacement asset. In the case of transfer of assets between spouses, the spouse disposing of the asset is treated as having disposed of the asset at an amount equal to its base cost and the spouse receiving it is treated as having acquired it at a cost of the same amount.

Assets disposed of under the following circumstances are subject to roll-over relief:

1. Involuntary disposal of certain assets under certain circumstances (Para. 65)

2. Reinvestment in replacement assets, under certain conditions (Para. 66)

3. Transfer of assets between spouses (Para. 67)

Quote
Paragraph 67(1)(a) provides that the disposing spouse must disregard any capital gain or loss when disposing of an asset to his or her spouse.
13.3.3 The transferee (acquiring) spouse
Paragraph 67(1)(b) ensures that the spouse to whom an asset is disposed of takes over all aspects of the history of the asset from that person’s spouse and where applicable, from the executor of the deceased estate of that person’s spouse,494 namely,
• the dates of acquisition and incurral of expenditure,
• the expenditure incurred,
• the currency in which the expenditure was incurred,495
• the usage, and
• any amount received or accrued in respect of the asset that would have constituted proceeds on disposal of the asset had it been disposed of to a person other than the transferee.496
494 Paragraph

Orca

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Re: Tax
« Reply #63 on: July 28, 2013, 08:06:52 pm »
Thanks Moon. Now as I am a Trader according to SARS. Only 25% of my loss will be carried over to the following year. Is this correct?
I started here with nothing and still have most of it left.

Orca

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Re: Tax
« Reply #64 on: August 12, 2013, 07:13:38 pm »
Just got back from my accountant. Seems very bad for me. Short story:

R720k in managed account in end 2007. By 2009, it had dropped to R420K then sold all.

Took over the account myself and traded it back into profit after 3 years.

During this time I never divulged my trading activities to SARS. I did not know that one had to if you don't actually transfer the money into your pocket. Stupid me.

I have now "churned" my portfolio to over R2m.

 

Now my accountant has put me in a spot. Ask SARS for a VDP (Voluntary Disclosure Progamme) and if granted, the losses will NOT carry over to the next year. Every year will start anew.

 

Do not ask for VDP and I will pay double the tax owed plus interest and penalties. :wall:

 

This is a warning to traders that don't divulge their trades. They WILL pick it up.

 

 
I started here with nothing and still have most of it left.

Aragorn

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Re: Tax
« Reply #65 on: August 13, 2013, 08:41:44 am »
Now my accountant has put me in a spot. Ask SARS for a VDP (Voluntary Disclosure Progamme) and if granted, the losses will NOT carry over to the next year. Every year will start anew.

Do not ask for VDP and I will pay double the tax owed plus interest and penalties. :wall:

 
Eish!!!!! That must put a dent into your Portugal plans?
 :(
Not idly do the leaves of Lorien fall.

Orca

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Re: Tax
« Reply #66 on: August 19, 2013, 03:31:53 pm »
Open stock. Yearly trades. Closing stock. Wieghting costs. What a shambles. Took me a week to attempt 1 of 7 years then gave up as did my accountant.
Had a couple of coronary events and infarctions before TheImposter on the other site came to my rescue. He is a CA and did my 2012 tax in less than 5 minutes for me.
Today I did 4 of the 7 years so only 2 left. What an easy method. :TU:

I now realize that most accountants do not understand complex trading accounts if they themselves do not trade or experienced trading tax like mine.
Brokers seem to use a standard program to simplify tax. You must just know how to use it.
I started here with nothing and still have most of it left.

Bundu

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Re: Tax
« Reply #67 on: August 19, 2013, 03:42:29 pm »
if for example you sell some shares that you have held for only a year and also sell others that you have held for more than 3 years, will you automatically be taxed on the longer than 3 years held shares at PAYE rates or can you assume that those will be taxed at CGT?
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

Orca

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Re: Tax
« Reply #68 on: August 19, 2013, 07:08:31 pm »
Forget it. Your gains will be added to your income at 100%. I still have a prob with trading stocks ie. If you stop trading the stocks for 10 years, SARS will still consider them as "Trading Stocks".
How to get out of this, I don't know. I believe that if you change your stocks from Trading Stocks to Investing Stocks, you must consider your stocks as SOLD at some point and pay gains at 100% into your income. This is "Change of Intention" clause.
I need more clarity on this.
I started here with nothing and still have most of it left.

Bundu

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Re: Tax
« Reply #69 on: August 19, 2013, 07:14:30 pm »
But surely a portfolio could consist of two parts, one part being long term investments and the other short term, i.e. trading
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

Orca

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Re: Tax
« Reply #70 on: August 19, 2013, 07:31:24 pm »
But surely a portfolio could consist of two parts, one part being long term investments and the other short term, i.e. trading
That is the way to go. Split the 2. I never did and will pay for my mistake.
I started here with nothing and still have most of it left.

Bundu

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Re: Tax
« Reply #71 on: August 19, 2013, 07:43:25 pm »
But surely a portfolio could consist of two parts, one part being long term investments and the other short term, i.e. trading
That is the way to go. Split the 2. I never did and will pay for my mistake.

Orca, could you maybe ask TheImposter if that would be acceptable to SARS?
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

gcr

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Re: Tax
« Reply #72 on: August 19, 2013, 08:37:38 pm »
I raised the issue with Simon Brown of JustOneLap.com fame who runs the Power Hour at the JSE monthly - he said you need to speak to your broker and partition your accounts - termed trading accounts by most brokers. One would be designated as an investment account and the other a real trading account where your frequency of buying holding and selling happens within the 3 year window - this account is flagged as a trading account where profits and losses will be treated as income and expenditure. I presume home computer costs and office usage and packages can all be treated as deductions from revenue. The other account would be subject to the 3 year resell criteria imposed by SARS. The essence is you do need to have 2 separate accounts for appropriate treatment by SARS - if you give up trading then you merely let your trading account become dormant, because to reclassify a trading account to an investment account in SARS eyes is going to be an absolute mission
Not everything that counts, can be counted, and, not everything that can be counted counts - Albert Einstein

Bundu

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Re: Tax
« Reply #73 on: August 19, 2013, 08:48:00 pm »
thanks gcr - I will have to find out if ABSA even offers dual accounts - seems like quite a schlepp, but it would be a PIA to pay full tax in single year on a shares growth over three years, just because you sold a trading share....
« Last Edit: Tomorrow at 06:13:55 PM by Bundu »

tgg78703

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Re: Tax
« Reply #74 on: August 19, 2013, 09:32:08 pm »
I doubt that anyone of  the share trading platforms can seperate trading from investing, they just send sars a reconcile of your trades for the year. profits made losses made.

It will be for  your tax person  to do the to reconciling and motivation. Happened to me when I inherited shares from my father and they were transferred onto my account at his cost. The estate had already paid all the taxes, but they reflected on my trading account at a massive profit, I sold most of them and the profit was adjusted to the actual value at time of transfer.

But only after I pointed this out to my tax person. They are it would appear not to clued up on this.

So the same should happen on your tax return. The tax person should point out that profits made on a certain share where l/t and not trading.

Just read this please

    http://www.sars.gov.za/AllDocs/OpsDocs/Guides/LAPD-IT-G11%20-%20Tax%20Guide%20for%20Share%20Owners.pdf