Withdrawals from funds

[Sideshow Bob]

Thanks to all for helpful replies. Got some funds out. To me it makes sense to take bit of funds out once a year (if needed of course) to take advantage of 40k capital gain allowance.

 

[Sideshow Bob]

This is becoming a bit of yearly addiction now.

 

[supersunbird]

This is becoming a bit of yearly addiction now.

Renovations or withdrawing of funds?

 

[Sideshow Bob]

Renovations or withdrawing of funds?

Withdrawing funds for renovations.

 

[r4nd0m]

Coming at this from a trading perspective, you can pull up the asset's daily/weekly charts and look at the probability that it's overbought using something like a 200 moving average (MA) or an indicator (e.g MACD).

Since you're in profit and based on a ruleset you've defined, you'd cash out at opportune periods.

This is sort of fringe trading, because you're doing a half/half buy-and-hold while trying to time the market.

This tends to work nicely with assets that have near linear/smooth trending (like the S&P 500). For example, put a 200 MA on the S&P500 daily and see how it respects the boundary.

Something that is very volatile would cost you more opportunities and also result in higher trading fees.

Keep in mind near everything is linear/trending if given enough time and looked at in the right time frame. The problem is either sustaining or preventing drawdown along the way.

 

[Snyper564]

Withdrawing funds for renovations.

at this rate you likely going to trigger income tax especially doing it on an annual basis.

 

[Sideshow Bob]

at this rate you likely going to trigger income tax especially doing it on an annual basis.

eish.. taxman wants cut everywhere you go. I was hoping to take advantage of annual R40K CGT gain exclusion but maybe I need to read a bit on it.

 

[Snyper564]

eish.. taxman wants cut everywhere you go. I was hoping to take advantage of annual R40K CGT gain exclusion but maybe I need to read a bit on it.

Yeah be very careful the exemption typically applies when holding 3 years - but selling every year poses a potential issue. Speak to your tax person

 

[Sideshow Bob]

Got certificate from coronation and sale of units reflects under Capital gains. I suppose Sars can treat this as normal income if it happens every year ?

 

[WollieVerstege]

Got certificate from coronation and sale of units reflects under Capital gains. I suppose Sars can treat this as normal income if it happens every year ?

Not just yearly, but SARS can deem it as income at any point if they believe that you are withdrawing with the intent of funding day-to-day living expenses.

Guy I knew withdrew money at weird times, 3 months, 7 months, 2 months hoping to hide from SARS. After a few years he got audited and SARS deemed that these withdrawals were in fact income and he was slapped with back taxes and penalties. Bankrupted him.

So yeah, if anything you do could result in you not paying your share of income tax, be very careful.

 

[Sideshow Bob]

Not just yearly, but SARS can deem it as income at any point if they believe that you are withdrawing with the intent of funding day-to-day living expenses.

Guy I knew withdrew money at weird times, 3 months, 7 months, 2 months hoping to hide from SARS. After a few years he got audited and SARS deemed that these withdrawals were in fact income and he was slapped with back taxes and penalties. Bankrupted him.

So yeah, if anything you do could result in you not paying your share of income tax, be very careful.

Thanks, I cancelled the idea of withdrawing every year. I will keep it random (but not before 3 years) and see what happens.

 

[Snyper564]

Thanks, I cancelled the idea of withdrawing every year. I will keep it random (but not before 3 years) and see what happens.

Yeah 3 years is the only true method to get capital otherwise be ready to argue capital under other facts

 

[3WA]

Not just yearly, but SARS can deem it as income at any point if they believe that you are withdrawing with the intent of funding day-to-day living expenses.

I didn’t know about this. I though that as long as you held it for a long time (>3 years), and weren’t trading it, it fell under CGT.

So if you sell shares and then use it to fund your monthly costs it becomes taxable under income tax? That sucks.

 

[Snyper564]

I didn’t know about this. I though that as long as you held it for a long time (>3 years), and weren’t trading it, it fell under CGT.

So if you sell shares and then use it to fund your monthly costs it becomes taxable under income tax? That sucks.

No 3+ years you safe its less than 3 years thats an issue

 

[JayM]

I didn’t know about this. I though that as long as you held it for a long time (>3 years), and weren’t trading it, it fell under CGT.

So if you sell shares and then use it to fund your monthly costs it becomes taxable under income tax? That sucks.

It's a bit more complicated than this. If you hold for >3 years, gains are guaranteed to be deemed of capital nature. If less than 3 years, it comes down mostly to your intention at the time of purchase. You're well within your rights to declare it as a capital gain if your intention was to hold long term, even if you sell before 3 years. If you're buying and selling often, your claim may be denied though. I sold some US stocks after holding well under 3 years at the start of Covid, and SARS were fine that there was a plausible explanation why I sold something so soon.