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Online Share Trading

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For the tax experts on this forum

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Preston
Super Contributor
Question 1) Do we define Cfd's as a hybrid instrument? Question 2) As per the Income Tax Act , is dividend received ,net of dividend tax, on a hybrid instrument deemed to be interest received which is then included in your Gross Income and is subject to Income tax again?
9 REPLIES 9
SimonPB
Valued Contributor
Preston
Super Contributor
The question remains, is Cfd's a hybrid instrument and the Income Tax "deeming provision" of div's received on hybrid instrument.
THRESHOLD
Super Contributor
Per OST - the div on the underlying SHARE is effectively ceded - so big argument with SARS potentially looms for you. With others EG. BOE - the DIV is "manufactured" to track the value on the CFD - so taxable.
prancing_horse
Super Contributor
Agree, don't trade CFDs here but do on BOE,IG and PSG and dividend taxable on all those platforms.
Preston
Super Contributor
@THRESHOLD, so you whacked with div tax from OST , then deeming provision will consider that amt as interest income and then you get taxed a second time by virtue of inclusion of Gross Income. (Interest exemptions applies).
THRESHOLD
Super Contributor
Preston - I am not dispensing tax advice - but you would technically be entitled to a rebate of the amount already paid. Consult a tax advisor. AND - if you are establishing a position - relying on dividends to fund the cost of interest - consider getting an advance ruling from SARS; BUT again discuss this with your tax advisor.
Preston
Super Contributor
@prancing horse , share the same view, thanks. One thing is certain is IG platform is exceptionally stable compared to Easy Trader.
Not applicable
Have to say I don't trust OST in this regard. They also treat listed property income distribution as dividends, and withhold that too. I am curious as to what happens to the money held ...
THRESHOLD
Super Contributor