A Tax question.

[john_1]

If you are a holder of AMS at the biggining of the year get the divs then sell and buy implats to get the div and the finish the year with AMS. No unusual capital gain to speak of, even possible capital loss. Is there any tax implication.

[DF]

I have not got the law in front of me, but there is a new law that says that Share profits will be of capital nature if kept for 3 years or longer. Thus for you all profits and losses from buy/sell transactions within a year will be deemed of income nature and not capital gains/losses. The dividend portion will be tax free for the company will pay the STC tax on the dividends declared. Just one other thing to keep in mind is that you will loose some of your face value due to trading fees....but I am sure you know that better than I do.

[DF]

Ah, I found it just for the reference : It is new S9C in income tax act (Effective from 1 Oct 2007) and interesting that it also applies to private company shares.

[john_1]

Thanks so if you use an instalment, wiping out any capital gain in return for divs = no tax..?

[DF]

If I understand Installments correct, Yes. Divs = Tax free . If you make final pmt of installment you take ownership of the share. If you sell Installment it is basicaly like warrant trade and will be trading income or loss.

[DF]

Div portion = always tax free . Rest of trade of income nature Profit or loss if within 3 years.

[john_1]

as I thought, thanks for your time and knowlage.

[louisg]

DF does a roll-over of an installment into the same underlying share trigger a tax event each time or only when you stop rolling it over? I'm trying to find out if one could roll-over an installment for more than three years and therefore claim a capital gain as opposed to it being deemed of an income nature when one sell it.

[DF]

I am not sure....? If you roll over, does the installment value change? Do you have to pay any difference in value ? I can not understand why STD bank would give you the exposure for 3 years for only half the price with only initial installment value??

[louisg]

Simon, could you perhaps help?

[Shaun_Siddall]

The instalments have an interest component built into the price?

[Shaun_Siddall]

Tax view - instalment is a short term trading derivative. Considering its nature i dont think you would get away with it as a capital gain. omo