Would this be legal?

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RetroBok

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I'm not the most savvy person when it comes to finances and legal stuff and I'd like to know whether the following would be legal, or if it's been done before. (I'm sure it has)

Get a shed load of people to all donate R1 each into your account on the provisio that they will get it back after exactly 1 year.

So for example if I got a million people to donate R1 million into my account on the 1st Jan 2010 so the balance on the account is R1 million.

On the 31st December I then transfer all the money back to the respective donors. I'm then left with the interest.

Is this legal? Would this be classified as a pyramid scheme or similar? Is it a good or bad idea?

Ta!
 
What will the tax implications be?

Guess you would have to pay % over to SARS.
 
Problem would be:

Tax
Finding a million People (why are they going to give you R1)
Mission of transfer 1million 1rands back (cost you the amount you earned in interest :P
 
Not SARS but HM Revenue Service :D
Not got a clue about the tax implications, but if there was tax to be paid I'd pay. Although I'm not sure what the interest would be on R1 million (or in my case £1 million). Depending on how much the interest was would obviously determine how much tax I'd pay. If I remember corectly it would probably fall into super tax bracket which I think is 50%...

But like I said I haven't the foggiest idea.
 
Freaksta said:
Problem would be:

Tax
Finding a million People (why are they going to give you R1)
Mission of transfer 1million 1rands back (cost you the amount you earned in interest :P
Click to expand...

Tax is fine, and it doesn't necessarily have to be a million people giving me R1 each, the "donations" could be minimum R1.

It would be a mission transferring it back but it could be worth it for the sake of the amount of interest I'd get?
 
I think I'd only pay tax on interest received, since the money given to me is a donation? Ja a million people is a lot, but a 100 000 donating a tenner each is better. :D

I'm sure the bank could automate the transactions...when I pay it back? After all I'll have a year to set up all the transfer details?
 
You would only pay tax on the interest (profit) - you do not pay tax on earnings:

You earn R1 000 000, but you also owe R1 000 000; so your profit is 0. After one year you now have R1 100 000, but owe R1 000 000; so your profit is R100 000, and you will pay tax on it....

You would probably have to do it within a financial year....

Edit: The money is a donation; but you are not a charity :) The above assumes you are registered as a business, an individual will pay income tax on the full R1 000 000
 
Conradl said:
You would only pay tax on the interest (profit) - you do not pay tax on earnings:

You earn R1 000 000, but you also owe R1 000 000; so your profit is 0. After one year you now have R1 100 000, but owe R1 000 000; so your profit is R100 000, and you will pay tax on it....

You would probably have to do it within a financial year....
Click to expand...

Ja so assuming I get £100 000 at the end of the year and assuming that would throw me into super tax I'd get approximately £50 000 that's just fine by me :D
 
just on the practical side, transfering a million £1 would probably wipe out that interest in bank charges.
 
milomak said:
just on the practical side, transfering a million £1 would probably wipe out that interest in bank charges.
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Normally to transfer money you don't get bank charges? Although on a million quid I'm guessing there will be some charge...
 
milomak said:
just on the practical side, transfering a million £1 would probably wipe out that interest in bank charges.
Click to expand...

agree ... unlikely that the venture would viable ... but maybe the electronic transfers o'er there are free?
 
McT said:
agree ... unlikely that the venture would viable ... but maybe the electronic transfers o'er there are free?
Click to expand...

If by electronic transfers you mean me transfering money from my Bank X into a friends Bank Y via the net... yeps it's free.
 
How is the money a 'donation' if you are paying it back to them? It sounds like a loan. Or did I miss something?
 
and 25 years later, when you've finished the last of the million transfers back, you can retire...hmmm...for a year...then the 30 000 pounds you made before tax is gone :p

brilliant plan :rolleyes:

guess you're bored?
 
SiriS said:
and 25 years later, when you've finished the last of the million transfers back, you can retire...hmmm...for a year...then the 30 000 pounds you made before tax is gone :p

brilliant plan :rolleyes:

guess you're bored?
Click to expand...

A little :D but I was more interested in the legal implications really. BTW re-transfering 1 million transactions is approx 117 p/h 24 hours a day every day for a year, so not really viable :D
 
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