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Online Share Trading

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3 Yr Capital Gain Rule

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Dabbler
Occasional Contributor
Will this rule affect any body elses perception of the market or will you just keep trading as is and just pay more tax? I notice that this one slipped quietly below the radar on budget day and has brought little argument and debate, yet I sincerely believe that it will affect market liquidity! Other opinions?
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6 REPLIES 6
SimonPB
Valued Contributor
well it is actually an improvement as previously it was five years. But I don't see it making much difference.
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Dabbler
Occasional Contributor
But surely this will make all of us that currently trade weekly or so traders and not investors now? I was under the impression that generally most of us classify ourselves as investors and therefore won't be liable for tax at our marginal rates on the profits made, but rather only the capital gain made, which amounts obviously to much less. My understanding is that the Tax Man will now use this to make us all out to be traders (as we don't generally hold shares for 3 years or more except if we perhaps have a favourite Blue Chip etc) and therefore taxable in full on all profits made in future (post October 2007)?
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Dabbler
Occasional Contributor
But surely this will make all of us that currently trade weekly or so traders and not investors now? I was under the impression that generally most of us classify ourselves as investors and therefore won't be liable for tax at our marginal rates on the profits made, but rather only the capital gain made, which amounts obviously to much less. My understanding is that the Tax Man will now use this to make us all out to be traders (as we don't generally hold shares for 3 years or more except if we perhaps have a favourite Blue Chip etc) and therefore taxable in full on all profits made in future (post October 2007)?
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SimonPB
Valued Contributor
dabbler, if you were netering/exiting you were most definately a tarder under the eyes of SARS. The line in the sand was 5 years but could be smudged, but never for weekly entries/exits.

Check out the SARS doc on the menu under ==>my account ==> tax statements. It is from teh bedget 2006, so talks of five years rather then the new 3 years.

lastly remember that a trader can deduct costs (brokerage, losses, related newspapers/magazine, subscrptions, live prices, internet accessetc.).
And very last point. I am not an accountant nor a tax expert. So get real advice.
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cfm
Super Contributor
If you generally hold shares for a week, you are a trader according to SARS. Always been that way. If you classified yourself as an investor and only declared CGT, then you better hope SARS does not audit you. The rule has been five year (now three years) with anything longer than a year being a grey area where you are judged on your original intent.
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Dabbler
Occasional Contributor
Generally many of us I expect don't trade for weeks on end, but in weeks like this, there is a lot of activity. Those that trade warrnats on teh other hand may be a different story from many of teh strings one reads here. Furthermore, one does not necessairly trade the same security each week when activity is up, but slowly build up a portfolio of various shares within reason, or increase exisiting holdings, hence a buy here and a buy there every so often, not religiously each and every week. If one really followed a good technical trading methodolgy you would be in and out very regulalry, but I am yet to trust it that well to follow it. Hence I personally have nothing to fear, not with my few invested pennies anyway, but before taking on a technical trading method I was just curious to know. Thanks for the feedback.
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