Mirror (non)Trading International 2 - The Fallout

[borga]

Capital gains only kicks in after holding the investment for some time (at least 1 year, I think it is?). The fact that, used as it is by investors and MTI here, bitcoin is a security (like stocks and shares) the taxation will be as income if I read the rules correctly. This will be particularly so if you have withdrawn amounts from growth over the time you have been invested. Incidentally, even if you lose when MTI folds or is closed down, whatever you have drawn while the scheme has been running will be income as far as SARS is concerned. [The lady in the Cape who invested some millions and is drawing a nice 80K monthly income might really be crying in her Weetbix!]

Capital gains are from day 1 but SARS may consider it Income in nature then then you will need to proof it is capital in nature, they are a number of court cases regarding this but it involves element such as what your intent was when you started (profit or long term growth), number of similar transaction you did in the period, change in intent and potentially a number of other factors the court will use to determine if it was capital or income in nature.

With my investments I try to play it save as even it SARS consider you a trader there is a section in the tax act somewhere that says that if you held the share longer than 3 year (I think) then it is considered capital in nature. So I play it safe and keep all my shares at least 3 years to avoid having to argue with SARS on if I should pay capital gains or income tax on any appreciation on shares.

 

[expedite]

Capital gains are from day 1 but SARS may consider it Income in nature then then you will need to proof it is capital in nature, they are a number of court cases regarding this but it involves element such as what your intent was when you started (profit or long term growth), number of similar transaction you did in the period, change in intent and potentially a number of other factors the court will use to determine if it was capital or income in nature.

With my investments I try to play it save as even it SARS consider you a trader there is a section in the tax act somewhere that says that if you held the share longer than 3 year (I think) then it is considered capital in nature. So I play it safe and keep all my shares at least 3 years to avoid having to argue with SARS on if I should pay capital gains or income tax on any appreciation on shares.

Seeing that you traded with it it can only be normal income and not capital gains.

If I bought btc and kept it in in say Luno and let it accumulate, then that is a different matter.

 

[daneard]

Capital gains are from day 1 but SARS may consider it Income in nature then then you will need to proof it is capital in nature, they are a number of court cases regarding this but it involves element such as what your intent was when you started (profit or long term growth), number of similar transaction you did in the period, change in intent and potentially a number of other factors the court will use to determine if it was capital or income in nature.

With my investments I try to play it save as even it SARS consider you a trader there is a section in the tax act somewhere that says that if you held the share longer than 3 year (I think) then it is considered capital in nature. So I play it safe and keep all my shares at least 3 years to avoid having to argue with SARS on if I should pay capital gains or income tax on any appreciation on shares.

The determination of whether the gains are capital or income in nature does come down to intention (as you rightly pointed out). I dont believe there are any provisions setting out timeframes in the Tax Act (unless it changed since I studied it). So as an example, if you have your own share portfolio that you intend on holding long term and you buy another share that you end up selling a month later, you would be able to argue and declare successfully that your intention is to hold for capital appreciation. There is room for interpretation.

I attached a "fun" and informative tax guide for tax implications of owning shares. Skip to section 3.2 which talks about intention, and lists a couple of legal cases that gave rise to the legal precedent.

 

[PsyWulf]

The determination of whether the gains are capital or income in nature does come down to intention (as you rightly pointed out). I dont believe there are any provisions setting out timeframes in the Tax Act (unless it changed since I studied it). So as an example, if you have your own share portfolio that you intend on holding long term and you buy another share that you end up selling a month later, you would be able to argue and declare successfully that your intention is to hold for capital appreciation. There is room for interpretation.

I attached a "fun" and informative tax guide for tax implications of owning shares. Skip to section 3.2 which talks about intention, and lists a couple of legal cases that gave rise to the legal precedent.

Further to this

The intention when I cash in my MTI gains to fiat to buy a new Doublecab seems to fall under Income and is immediately taxable

 

[newby_investor]

The determination of whether the gains are capital or income in nature does come down to intention (as you rightly pointed out). I dont believe there are any provisions setting out timeframes in the Tax Act (unless it changed since I studied it). So as an example, if you have your own share portfolio that you intend on holding long term and you buy another share that you end up selling a month later, you would be able to argue and declare successfully that your intention is to hold for capital appreciation. There is room for interpretation.

I attached a "fun" and informative tax guide for tax implications of owning shares. Skip to section 3.2 which talks about intention, and lists a couple of legal cases that gave rise to the legal precedent.

The three-year thing is a popular rule-of-thumb, I don't know that it's written anywhere in the law. Selling a few shares after a short period of time can probably be seen to be capital gains if it's the exception rather than the rule. If you regularly engage in short-term trading you're going to have a hard time arguing that.

Further to this

The intention when I cash in my MTI gains to fiat to buy a new Doublecab seems to fall under Income and is immediately taxable

Capital gains will only ever apply if the value of your individual asset is appreciating. If you buy X amount of bitcoin, and sell X amount (much) later for a larger number of rands than you paid for it, then it's capital gains.

If you have X amount of bitcoin, and every day you get "interest", then you are cashing in on the "growth" or "interest' - then it is most certainly income.

 

[Decor13]

Busy man, mr Steynberg, not only does he work 20 hour days and knights members as Bitcoinaires, the man still has time to host a golf day as well!! The newly employed wheelie bin pushers...doubling up as support workers, probably gives Johan free time for all the extramural activities.

 

[borga]

The three-year thing is a popular rule-of-thumb, I don't know that it's written anywhere in the law. Selling a few shares after a short period of time can probably be seen to be capital gains if it's the exception rather than the rule. If you regularly engage in short-term trading you're going to have a hard time arguing that.

I tried looking for it but couldn't find it, then I looked at the document Daneard shared and saw it there.

Section 9C (2) (Income tax Act)
Any amount received or accrued (other than a dividend or foreign dividend) or any expenditure incurred in respect of an equity share must be deemed to be of a capital nature if that equity share had, at the time of the receipt or accrual of that amount or incurral of that expenditure, been held for a period of at least three years.

So holding a share 3 years makes it of a capital nature. And like Daneard said selling if after a shorter period it can still be Capital of nature, but I don't remember any black and white rules about it so the more often you do it the more evidence you give SARS to argue your intent was Income, so I keep my shares for 3 years, and then if there is a instance where I need to sell in less than 3 years I don't have to worry about causing a pattern or having it declared income as that would be the only instance where it would be short term.

 

[LJ1234]

and it continues...

 

[Wary GOM]

Busy man, mr Steynberg, not only does he work 20 hour days and knights members as Bitcoinaires, the man still has time to host a golf day as well!! The newly employed wheelie bin pushers...doubling up as support workers, probably gives Johan free time for all the extramural activities. View attachment 966438 View attachment 966440

Does history repeat itself? I hope so: one of the mistakes that cost Willie Breedt his nice little Vaultage scam was hosting a charity golf day at Ruimsig, Roodepoort. After the event the beneficiaries received nothing. Being people in need, the community got on the case. A couple of articles in the Roodepoort Record helped spread outr man Willie's reputation. With any decent sort of luck the same thing will happen here.

 

[PrinceVlad]

I just love MTIs slogan.... "Grow your Bitcoin". I take it no one realizes that as soon as you pay it over to them it isn't yours anymore. You have, at most, a claim against them for the value of your bitcoin and your return that you earned.

Be that as it may, I have someone in my family and a close friend invested in it and as soon as I talk about it, I'm the negative one. I've showed them this thread, dishonest.co.za, and some of the news stories. It's all lies. According to them on their Whatsapp group, management has ensured them that all is well.

It gets tiring

 

[Wary GOM]

MTI members really shouldn't place much hope that the new 47 staff can do much to speed things up. After all, that Lenova 2009 is at maximum capacity as it is!

Anyone on the thread able to say whether blockchain processing times are up because of the price activity of bitcoin? Also, does anyone know whether MTI has taken account of the extra activity and offered higher fees? I hope not and hope that the majority of members haven't the faintest idea of legitimate delays but just start suffering and get angry!

 

[Wary GOM]

I just love MTIs slogan.... "Grow your Bitcoin". I take it no one realizes that as soon as you pay it over to them it isn't yours anymore. You have, at most, a claim against them for the value of your bitcoin and your return that you earned.

Be that as it may, I have someone in my family and a close friend invested in it and as soon as I talk about it, I'm the negative one. I've showed them this thread, dishonest.co.za, and some of the news stories. It's all lies. According to them on their Whatsapp group, management has ensured them that all is well.

It gets tiring

Exhausting and debilitating.

 

[MissKnow-a-Little]

Busy man, mr Steynberg, not only does he work 20 hour days and knights members as Bitcoinaires, the man still has time to host a golf day as well!! The newly employed wheelie bin pushers...doubling up as support workers, probably gives Johan free time for all the extramural activities. View attachment 966438 View attachment 966440

I thought he was testing the live support chat.

 

[Wary GOM]

PrinceVlad's comments raised a random thought. What if at some point JS headed for Liberland and left Clynton and Peter Muller (or anyone else) in the hot seat. If they then pulled a BTCG argument used by Cheri, they could say that THEY had also only seen the back-office reports and trading that JS displayed for them. So they have also been fooled. Sorry, there WAS NO profit so members can only claim what they invested less costs for hiring uberbot etc etc. The big-earners will then magnanimously pay a couple of million "out of their pockets" to help members out.

 

[PrinceVlad]

PrinceVlad's comments raised a random thought. What if at some point JS headed for Liberland and left Clynton and Peter Muller (or anyone else) in the hot seat. If they then pulled a BTCG argument used by Cheri, they could say that THEY had also only seen the back-office reports and trading that JS displayed for them. So they have also been fooled. Sorry, there WAS NO profit so members can only claim what they invested less costs for hiring uberbot etc etc. The big-earners will then magnanimously pay a couple of million "out of their pockets" to help members out.

Doesn't exactly work like that. As Directors of a limited company, they have a fiduciary duty, so the case may be made that they had to be aware of what was going on. So on one hand they did know so they're under the gun, or they didn't know and face that possibility too. My guess is they'll have a difficult time to prove the didn't know

 

[aofafrica]

Doesn't exactly work like that. As Directors of a limited company, they have a fiduciary duty, so the case may be made that they had to be aware of what was going on. So on one hand they did know so they're under the gun, or they didn't know and face that possibility too. My guess is they'll have a difficult time to prove the didn't know

Ignorance is negligence when you have fiduciary responsibility.

 

[hurter8]

Holy **** this escalate button is something else. How long before you can escalate your escalation

 

[Wary GOM]

Ignorance is negligence when you have fiduciary responsibility.

Of course. Your'e dead right. I was losing sight of fiduciary duties, which are also requirements of office bearers (directors, whatever they are called by the club) of a CIS.

 

[Wary GOM]

Holy **** this escalate button is something else. How long before you can escalate your escalation

I don't think you can. You will just get shouted at and told to be patient. Don't forget, as an ordinarey investor you are really lower than shark s**t, and even more so if you want to withdraw.

 

[SkosanaBigMoney]

Thank you people of this forum
I have able to take out all of family money, was very scared