Div Trading

[BGW]

what is the general view on Dividend trading. Assume you have R100k profit from shares trading - we would be liable for R40k in tax and thus R60k after tax. Assuming we bought shares cum div on Friday and sold on Monday ex Div made a loss that approx the div say R75k. Thus profit reduces to R25k but Div is R75k -after tax of R75k plus 15k = 90k. Made 30k extra after tax Is there something wrong with my logic

[john_1]

Use the hot edd instalments, it works like a charm.

[Samir]

Nothing wrong with that. I do it to a certain extent. I think u will find that shares drop more than the dividend value when they go ex div. Just remember that when u claim deductions for tax purposes (use of laptop, 3g card, textbooks etc), SARS will pro-rata thee costs in the ratio of ur taxable vs non taxable income. Thus u will not get the full tax deduction as SARS will say that you are using your laptop and stuff to produce non taxable income(divs).

[BGW]

sorry new at this game - where do I find these - I can see EDS instalments - how do I find hot edd instalments.

[Preston]

Samir ,Banks usually produce 2 form of income , namely bank charges (vatable) and interest income (exempt from vat). It is for this reason that any asset purchased by the bank will not get the 14% deduction but rather a reduced vat portion , referred to as melting pot .This rate is determined by Commissioner.

[saash]

Also remember that trading profits are taxed according to your income tax rate, not 40%. So if all you made in profits for a year, and you don't earn any other salary etc, is R100k, then you're paying about 19% tax. The tax on interest earned above the interest exemption is added to your income and taxed according to the tables in the same way.

[Samir]

Preston, I was not referring to anything relating to VAT. Was talking in terms of a private sharetrade/investor who is likely not to be registered for VAT. I was referring to Income Tax consequences only.

[mantra]

what are your guys thoughts on Impala , I gather if you buy @ say 215 there is still a return of 3.5 % with in a week , hold on for two weeks extra, should come back with net of around 2% + tax free ?