hi mboss i think simon is being amusingly sarcastic..., and incorrect, because technically it is not on submission, but on assessment that you will pay tax. ;) but it is a question that obviously has not been posed for the first time on the forum. the half truth you are looking for is that you need to figure out if you are a trader or an investor, if your profits/losses are capital and/or revenue in nature and how to treat all of this in light of a few other tax dispensations on share profits. fortunately, or unfortunately as the case may be, there are a breed of people out there called financial/tax advisors who you can call on to help you. if you are a simple long term investor you may not need special advice and will get away with, at worst, over the counter advice at SARS. if your situation is more complex, you will not get around having to ask for professional advice.... and having to pay for it.
From what I understand the difference between a trader and an investor is the intention by which you buy the stock, and the period you hold the stock. If you hold the stock longer than three years you can safely (I think) be considered an investor and you will only pay CGT on your profit,assuming you make one. You would then submit this on your tax return, and pay on assessment. If however you hold a stock for less than three years SARS may consider you a trader and then you may be liable to pay Income Tax on any profit made, which could be a bit more complicated depending on the amount of trades you do and whether you actually make gains or not. The grey area as far as I can understand is the issue around the intention at which you bought the stock. To keep things clean I have opened up two accounts with SFM. One in which I keep stocks for investment purposes, and one in which I intend to trade - nothing done so far, since I dont know enough. I hope I have got this correct. There are some fairly good articles on the web about this.
blik, i think that is quite a good idea, even if only for your own sanity on what you are wanting to classify as what, because intent is paramount. SARS will always look at intent, and in certain instances you may still only have to consider CGT even where shares were disposed of before the 3 year term. but a share held for 3 years automatically qualifies for CGT treatment under one of the so called safe haven rules, in this case section 9c. mboss, you will never find ALL answers on a forum. a forum is great for sharing opinions and edging someone in the right direction, but for serious issues like tax you have to educate yourself very well (much the same with buying shares by the way) and you will NEVER get away with not having to ask someone for a professional opinion. the level of advice you seek will determine how much you have to pay for the advice, starting with zero if you are happy with the SARS consultant imparting wisdom. i know a little bit about tax, but i still learn and have to ask many times. as a start, perhaps read : http://www.techsysweb2.co.za/sites/moonstone/Morpheus/documentlibrary/43.pdf btw, to qualify my earlier remark on "when to pay tax" naturally also depends on whether someone is a provisional tax payer and whether earnings are less than or greater than 1 million per year.
There are a number of issues that affect the way you will need to treat profits (or losses) in your disclosures to SARS - Gains or losses of a revenue nature attract tax (did you trade to mainly to resell at a profit) - this is taxed at marginal rates - Or was your intention to hold the share as long term dividend yielding investment - this is taxed as CGT 25% for individuals - Futures and other contracts are by nature not long term investments
@P.K. sorry but CGT is not taxed at 25%, it is in fact also taxed at your marginal rate. you have to work out the capital gain of a transaction (proceeds less base cost) then you deduct your annual exclusion AND any assessed loss (of a capital nature) ca