Help with online trading

[fringe]

Thanks for reading my post.

I am currently considering doing some online binary trading. I have found a site online that that seems to be legit and is fairly easy to use. The only thing is that the site is based overseas and only deals in international currency. I currently bank with Capitec and had a look at their international payment terms which is kind of confusing. I will be receiving/making all payments by debit card. I would like to know if this is possible with Capitec and if anyone knows about the fees involved or if anyone has tried it themselves.

Would also like to know how I should declare this income in future tax returns.


Thanks again for taking the time to read and answer the post

 

[MKFrost]

You can deposit money into your trading account with your card. Capitec will charge you a fee a bit higher than the market price you see. Its usually around R0.20 to R0.30 higher than the market price on US Dollars.

There is however one catch. You may not fund any kind of trading account with a credit/debit card as per the exchange control legislation. I think Capitec also mentions that on their website. It will work but as said, you are not allowed to.

In regards to tax. You will pay provisional tax and you declare your trading profits as you would any other income. Best is to get somebody to do it for you as its a little more complex than just stating what you brought back as the profit is based on the average Rand value at the time the trades were made so you cannot just work on the amount you bring back say after a couple of months.

Also, if you are going to bring rather large amounts back on a regular basis you will have to register with the Reserve Bank otherwise the bank can decline your transfer i.e. refuse to allocate any transfer you make from abroad to your account. I think Capitec also have some information in regards to this on their site.

 

[fringe]

You can deposit money into your trading account with your card. Capitec will charge you a fee a bit higher than the market price you see. Its usually around R0.20 to R0.30 higher than the market price on US Dollars.

There is however one catch. You may not fund any kind of trading account with a credit/debit card as per the exchange control legislation. I think Capitec also mentions that on their website. It will work but as said, you are not allowed to.

In regards to tax. You will pay provisional tax and you declare your trading profits as you would any other income. Best is to get somebody to do it for you as its a little more complex than just stating what you brought back as the profit is based on the average Rand value at the time the trades were made so you cannot just work on the amount you bring back say after a couple of months.

Also, if you are going to bring rather large amounts back on a regular basis you will have to register with the Reserve Bank otherwise the bank can decline your transfer i.e. refuse to allocate any transfer you make from abroad to your account. I think Capitec also have some information in regards to this on their site.

Is it legal to do this with Capitec or any other South African bank. This is my main concern.

 

[MKFrost]

Is it legal to do this with Capitec or any other South African bank. This is my main concern.

I know of many who has and who are doing it and have not ever heard of them getting into any trouble. I just mentioned it as I know that Capitec specifically mentions it on their site and as said, its also in the exchange controls.

EDIT: I think the amount also plays a role. The correct way to do it will be to get a clearance from SARS and then have the bank wire the funds. When you do it via card there is no clearance and think that is where the problem is. But as said, I think the amount is what matters. Don't think any bank will do anything as long as the amounts are relatively low.

 

[Vleis12]

Officially you have to apply with SARS to take funds abroad as required by Exchange Control. The form is fairly short, your tax affairs must be up to date and you have to prove the origin of the funds, i.e. cash in an SA bank account (bank statement). Every person is now allowed to take R 4m per year abroad. Your bank would then ask you for this SARS clearance before transferring funds abroad to your offshore broker account. Whatever you take abroad this way don't have to be brought back to SA, but you can if you want to. Besides this, each person has a discretionary allowance (i.e. for example for credit card purchases when abroad) of R 1m (I think) per year, but I don't think you are technically allowed to use it to invest abroad, but is rather to pay for goods and services.

Contravention of exchange control is a schedule 1 offence, same as murder. Ridiculous, but stems from the old days.

 

[MKFrost]

These exchange controls are a real royal pain in the backside especially if you often move funds in and out. Its high time they abolish them but guess that will not happen as every man and his dog will move what they can offshore.

Then again, with the interest you get on foreign accounts its not really worth it so there might not be such a big outflow.

 

[fringe]

Thanks for all the replies.

I really what to do this legally and will not use my Capitec account. The site I am looking at is stockpair.net , if anyone has used them any advice will be appreciated.

Also if anyone could tell me the proper steps to go able doing this online international trading (I will not be trading to much at this time as I am just starting) I will probably be trading around R2000 - R5000.


And any specific bank or type of account that would be best for this as I don't mind opening a bank account to use only for the online trading.

Thanks again for all the info as I was unaware of most of it.

 

[Lukcydog]

I know of many who has and who are doing it and have not ever heard of them getting into any trouble. I just mentioned it as I know that Capitec specifically mentions it on their site and as said, its also in the exchange controls.

EDIT: I think the amount also plays a role. The correct way to do it will be to get a clearance from SARS and then have the bank wire the funds. When you do it via card there is no clearance and think that is where the problem is. But as said, I think the amount is what matters. Don't think any bank will do anything as long as the amounts are relatively low.

Hi MK,

Just out of curiosity, how do they do that? Standard bank blocks me from trying to transfer internationally using my card. Do they use some intermediary such as paypal?

Regards
LD