Taxman alert: How do you know when you have to give SARS a slice of your profits?

Fsp Invest, 03 Feb. 2014

Tags: tax, investing, capital gains tax, cgt, income tax, investor, trader, tax on investment profits, profits, sars, south african revenue service, money, trading, shares, paying tax on shares, paying tax on trading

When you invest in shares, one of your main reasons behind it is to make a gain. Over time, you hope that shares you bought into rise in value and make you a tidy profit. But when do you have to give the taxman his slice of your profits. Read on to find out where you stand…

As long as you’re not a short-term trader, there is a chance that you’ll have to pay the South African Revenue Service a portion of your profits as capital gains tax from investing, Gareth Stokes in Fear, Greed and the Stock Market explains…

As long as remain invested in the share, the good news is you don’t have to pay out anything. The problem comes when you decide to sell your holding.

When you sell your shares, you’ll have to declare your realised capital gain and see if you have to pay capital gains tax on the share transaction.

As it currently stands, if your gains exceed R17,500 a year, you will have to pay capital gains tax on it.

If you’re a trader, SARS will get a slice of your profits in income tax

If your investing activities are more trade like, short-term in nature, then it’s a different kettle of fish.

If SARS determines your investing activities as trading, then you have to pay income tax on your profits. That means you have to add on any income you make from trading to your other income, such as your salary.

Depending on your profits, this could push you into a higher tax bracket.

If you’re unsure of what your trading and investing activities deem you as or whether tax is payable, you should speak to your financial advisor, accountant or another tax specialist.

So there you have it, how to know when you have to give SARS a slice of your profits.

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