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Installment rollover Simon

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Not applicable
Aha... Murphys law here we come... whats the bet SAB pulls back, currently R200, will compare monday... buto n the otherside of the coin if I had of sold today it would probably be R205 come monday...
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surfer
Regular Contributor
personally i think instalments are a great product.turbos are ones for the long run.thx sbk
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louisg
Super Contributor
When you rollover an installment does it constitute a sale and therefore a taxable event or do you only pay tax on the actual sale of the installment? ie. without rolling it over.
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barry_1
Super Contributor
Thats the 64 thousand dollar question we would all like answered!!!!!How ever it should be addressed to the receiver.Better to get an auditor to put the question to the main receiver and not your local receivers as when they are in doubt they always say no to every proposal!!!!!!!!
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louisg
Super Contributor
As I have a long term dividend investment strategy I would think that I would be better off buying share installments as opposed to the share directly. However, if I have to pay tax every time I rollover the installment (I think its every 6 months), I would guess that I would be worst off by some margin in the long run. (My understanding is that their are no rollover brokerage or any other costs to take into account.)
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john_1
Super Contributor
How would the reciever know if you rolled over, no sale= no paper.. But I am no tax expert. I like SARS even less than I like bankers. All you are doing is renewing your lease ( interest)agreement.
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Preston
Super Contributor
Thanks John about Bankers. Much appreciated. Let think about this for the moment. If you roll over an Installment, technically there is no sale. So the reciever will ONLY assess you when there is an CONCLUSION. But will the RECIEVER grant you that deduction for COST incurred for rolling over that installment?. I think not!!. Technically there is no sale.
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john_1
Super Contributor
Barry spoke to the guys at investec. They recon as I do, however, how many people hold these for 3-5 years. meaning that it would be seen as a trade but they recon you can claim the interest charged against the capital gain
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Preston
Super Contributor
There is a section the Income Tax (I cannot remember) where the reciever will disallow any expenditure incurred the production of income , where such activities give rise to producing EXEMPT income.
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JohnnyCash
Super Contributor
U should be able to appply the CGT Roll Over rules where you elect to carry over the proceeds from a sale of an asset into the next one. Means u can even be in cash for a temporary period before putting it into the next asset. With a rollover you neer go to cash so it should not be a problem. This will also mean your original Cost will become the cost of your new asset. Only when you realise it in full will you then be required to pay CGT. U however have to disclose your decision to roll over a position. Can be done with any asset....
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john_1
Super Contributor
Jonny Cash.. I have always wondered what the tax implications would be if all you ever traded was anglo's. If I held them at the end of each tax year but traded them in between. Would the above apply or am I barking..
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Preston
Super Contributor
Your last line summaries everything "U however have to disclose your decision to roll over a position. Can be done with any asset." ---------------------------------------------------------------------Well said. If you disclose your intention, then the reciver will allow the additional cost of rollover as a deduction , however the ROR will apply the "Accrual concept" as defined in Gross income defination. Key concept..As date of disclosure what was accrued to you. "Anyway i do not work for the ROR, this is only my interpretation of the Income Tax, I could be wrong"
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Not applicable
Well I just sold a few of my SABSTB after the rollover and since sbk hasnt assigned a cost to them My remaining are sitting at R22k profit... lets hope it gets fixed and I dont have to pay SARS more than Ive made?
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JohnnyCash
Super Contributor
John, given that they would work on your point in time position, balance sheet you would be more than able to do this without it being picked up..... Certain loan account management practices around each Feb comes to mind.
However if you continue to disclose that each trade you elect to transfer your original position you may well be able to do it and disclose as well. Only risk would be if one of them RORs pointed a finger and said BUT THATs trading, then the roll-over election comes to nil as it'll be seen as income not capital.....
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john_1
Super Contributor
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louisg
Super Contributor
Thanx everyone for your input. Will be seeing my auditors next month, will ask their opinion.
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