SARS tax

[Dolby]

I know a few individuals here - so making fictitious numbers.

Let's say I earn R25,000pm (R300,000pa) @ tax 26%
But let's say I have R3,000,000 invested that brings an interest income of R30,000pm (R420,000pa) @ tax 31%

Does this mean my nominal for the year is R720,000 @ 41%?

 

[koeksGHT]

Capital gains taxed at it's own set rate and wouldn't fall under PAYE

 

[Dolby]

Capital gains taxed at it's own set rate and wouldn't fall under PAYE

Ah I see - I'm with you

 

[mikef]

I know a few individuals here - so making fictitious numbers.

Let's say I earn R25,000pm (R300,000pa) @ tax 26%
But let's say I have R3,000,000 invested that brings an interest income of R30,000pm (R420,000pa) @ tax 31%

Does this mean my nominal for the year is R720,000 @ 41%?

View attachment 538955

Neither interest or salary are capital gains

Not sure what you understand under the term "nominal" however your gross income in this scenario is R720k and subject to exemptions your marginal tax rate would be 41%

 

[bchip]

Ah I see - I'm with you

I think koeksGHT read too quickly.
He would be referring to if you sold your investments.

Interest income and and salary income would both be added to make total revenue.
In other words you would pay about R 210,000 in taxes (which is the 207448 + (720,000-708311)*41%)

[i.e. its not all of it @ 41% only the portion starting from that bracket -> 708,311]

The Interest portion also has an exemption of around R 23,000 (?) as well, which should be deducted

 

[Dolby]

Is REIT the same as interest, but from real estate shares ?

 

[bchip]

Is REIT the same as interest, but from real estate shares ?

Yes, income from REITS, interest from bonds, rental income from properties are all seen
as of "revenue nature". Dividends work differently

 

[Arthur]

Also, you don't pay entire income at the marginal rate. Our progressive tax system has tiers, and each tier has its own rate. You only pay at the top rate for that portion of your income in that tier. You pay 41% on that portion above R708 311 and below R1 500 000.

 

[SaiyanZ]

I think koeksGHT read too quickly.
He would be referring to if you sold your investments.

Interest income and and salary income would both be added to make total revenue.
In other words you would pay about R 210,000 in taxes (which is the 207448 + (720,000-708311)*41%)

[i.e. its not all of it @ 41% only the portion starting from that bracket -> 708,311]

The Interest portion also has an exemption of around R 23,000 (?) as well, which should be deducted

This is how it works. You will have to pay in tax if your interest is more than the exemption of R23k p.a.(like in the example)

 

[MirageF1]

And what if your total income is only from interest? And that exceeds 23k p/a?

Would you pay tax on balance above the 23k interest that year + Tax rebate?

 

[SaiyanZ]

And what if your total income is only from interest? And that exceeds 23k p/a?

Would you pay tax on balance above the 23k interest that year + Tax rebate?

Yep. Kind of sucks doesn't it. You manage to have a great year of trading, spending your time, lacking sleep, plus risking your money and then realize you have to pay in several hundred thousand to SARS.

 

[MirageF1]

Yep. Kind of sucks doesn't it. You manage to have a great year of trading, spending your time, lacking sleep, plus risking your money and then realize you have to pay in several hundred thousand to SARS.

So much for stimulating growth and less dependence on big corps via stay at home or private business...or saving your effin hard earned dosh for that matter on the measely interest rates offered!

No wonder ppl go into debt w/out a care in the world. Easier to go insolvent than save.

 

[Dan C]

And what if your total income is only from interest? And that exceeds 23k p/a?

Would you pay tax on balance above the 23k interest that year + Tax rebate?

AFAIK you will be taxed according to normal rates anything over and above the 23k threshold.

http://www.sars.gov.za/Tax-Rates/Income-Tax/Pages/Rates of Tax for Individuals.aspx

 

[Tikkop]

Yep. Kind of sucks doesn't it. You manage to have a great year of trading, spending your time, lacking sleep, plus risking your money and then realize you have to pay in several hundred thousand to SARS.

That's why you start a second business trading in your own name with the goal of losing money (but you don't tell SARS that) and thereby deduct the losses from you income and pay less tax.

 

[Dolby]

with the goal of losing money (but you don't tell SARS that)

I've heard they now flag business that lose for 2 or 3 years, because of this.

Unsure how true

 

[Zophos]

So...Correct me if I am wrong.

Capital Gains tax is basically a tax on inflation...

What other country has got capital gains tax...?

 

[Greg C]

Yep. Kind of sucks doesn't it. You manage to have a great year of trading, spending your time, lacking sleep, plus risking your money and then realize you have to pay in several hundred thousand to SARS.

Wrong thread to start a debate or whatnot. But what I am not for is the comment of why we should pay tax. The better question and should be specific here is why my tax money gets squandered, and stolen and not used to better our society. But tax is a necessary requirement in society. Management is what youre aiming at I think

Above posts were spot on basically.
Rebate of interest up to R23,800 if that hasnt changed. Interest included in gross income overall and taxed at the applicable tax tables as above.

Income retains its nature, (noting recent news on committees looking to change how income is taxed from CIS)

Good ol tax season

 

[SaiyanZ]

Wrong thread to start a debate or whatnot. But what I am not for is the comment of why we should pay tax. The better question and should be specific here is why my tax money gets squandered, and stolen and not used to better our society. But tax is a necessary requirement in society. Management is what youre aiming at I think

Above posts were spot on basically.
Rebate of interest up to R23,800 if that hasnt changed. Interest included in gross income overall and taxed at the applicable tax tables as above.

Income retains its nature, (noting recent news on committees looking to change how income is taxed from CIS)

Good ol tax season

The trading is on the side in my spare time. I feel like I've already contributed my fair share of tax from my normal job, just like everyone else. To get penalized for actively doing stuff in my spare time is annoying.

 

[marco]

Capital gains taxed at it's own set rate and wouldn't fall under PAYE

CGT gets added to your other income and is taxed at the applicable rate. Since I last looked you can deduct R40k from the gains and 33.3% of the remainder is added to your other income. This makes the effective tax on gains at 13% if you are a top earner.

Many small time stock traders think that they do not have to report their gains as it is a hobby of sorts. They do this for years doing numerous trades until they get caught like me and then have to struggle to get their books in order. It will be a mess I assure you. No bookkeeper or accountant will be able to help you as most do not trade stocks.

From my experience the first mistake you will make when filing is the Cost Of Sales (COS). SARS asks for it yet we don't know what it means so we enter the Purchases. Wrong.

If you know what COS is then any amount of churning trades will not bother you and will make your tax a breeze.

 

[Hamster]

So...Correct me if I am wrong.

Capital Gains tax is basically a tax on inflation...

What other country has got capital gains tax...?

Australia, Austria, Germany, Canada, Norway, Portugal, Spain, UK....