It is not acually a capital gains tax but more a tax on capital gains. ie it is governed by the Income Tax Act and attaches to the taxpayer. Your losses are available against your gains as a result. (I assume that you are not trading through a seperate company that you have established for that pupose.)
Home offices are a loophole that have been really clamped down by SARS, i.e. most benefits have dissappeared. This is really a specialist area, and considering that you think trading relates to Capital Gains I highly recommend you rather speak to a tax consultant. - Rule of Thumb: Purchases/Sales held for less than 3 years are taxable as if it were your employment.
If you trade from home, you have trading profit or losses and not capital gain. Capital gain arises if you hold a stock for 3 years , even then there is not much deduction to be applied to capital gain. Trading income/Trading loss Here i stand corrected,but you can prove that an allocated area of your home is designated to trading activity, then a deduction can be made against your trading profit.
If you are a trader you can claim any expenses that you have incurred in the production of your trade income. Capital gains and losses are separate from trade and can be setoff against each other. A trade loss however can be setoff against a capital gain but not visa versa.
Yes ,you are correct Simon. The tax base of the asset is reduced by deduction previously allowed.Remember that the primary rebate in respect of capital gain for disposal of primary property is extremely high in this depressed market,so why not take the deduction now and cross the other bridge when we get there.
OK. Assuming the capital gains tax you have to pay after 3 years of investing is R1m. You just sat at home and watch your shares grow. The outstanding amount of the loan you have on the house is R900k. Could you deduct that R900k to pay the remainder of the loan and pay the taxman only R100k?
did you sell your house in this hypothetical situation? Because CGT is only applicable on the sale. Also, they are different asset classes, with a house being subject to the R1m excemption on primary residences. So no, I don't think you can offset your share gains against your property
Wizard, assuming you make a Capital Gain of R1m. Let assume that annual exclusion is R15000. You have no Capital Loss on other asset disposed. So you will have to pay CGT at 10% on R985000. Let assume Capital Gain Tax is R100 000. So now you have R885 000 available which you can used to settle your house bond. Then from a trading perspective, you have no liablity so you cannot even claim the apportionate area of trading in relation to your house.
What I was really asking is if your Capital gain is R10m and the capital gains tax is plus minus R1m. Imagine you have R2m and that became R12m after 3 years. You take a loan on the house. Without that house you wonA't be able to execute that trade(hipotetically). Could that become the home-office which you could deduct from that capital gains tax and in the end of the day you pay on R100k?