TAX TRAINING FOR TRADERS Iquote Trading TRAINING DOCUMENT.

TAX TRAINING FOR TRADERSIquote Trading

TRAINING DOCUMENT

Contents

April 19, 20232Tax Training for Traders

• Welcome and introductions• Tax principles• Foreign currency transactions• Tax compliance• Exchange control• Examples

Tax Principles


Tax concept of “trade”• Any activity conducted and any trade or

profession, eg salary, renting property, trading in CFD’s

Tax Principles Cont…


Per Trade• Gross income

Amounts received not of a capital natureShares vs CFD’s and FuturesDisposal of shares deemed to be capitalSchemes of profit-makingBrokerage income



Per Trade• Gross income• Less: Exempt income

Local interest (R22,300/R32,000 – foreign exemption utilised) from all sources

Foreign interest/dividends (R3,700)Local dividends

• Equals: Income



Per Trade• Income• Less: Expenses/Losses

In the production of incomeNot of a capital nature

• Less: Deductions/Allowances• Equals: Taxable income/loss

Tax Principles Cont...


• Taxable income/loss per trade• Add back: Taxable loss from foreign trade• Add back: Taxable loss from “suspect trade”• Add: Taxable capital gains• Equals: Taxable income/loss

Taxable Income


• Taxable income• Determine tax liability• Less: Rebates• Less: Foreign tax credits• Equals: Tax payable

Expense Examples


• Direct expensesMonthly update feesTelephone/InternetCommissions paidEntertainment/Refreshments

• Motor vehicle expensesBusiness vs private

Expense Examples Cont…


• Home office expensesInterest & insuranceElectricity & waterRatesCleaning

Deductions/ Allowances


• Repairs• Wear and tear

ComputerOffice equipmentSoftware

• Pension/RA/Medical

Disallowed Expenses


• Personal expenses• Suspect trades• Re-imbursable expenses

Capital Gains Tax


Per asset• Proceeds• Less: Base cost

Pre-valuation date assetPost-valuation date asset

• Equals: Capital gain or loss

Capital Gains Tax Cont…


• Capital gain or loss per asset• Less: Annual/Special exclusions

Annual exclusion (R17,500)Primary residence exclusion (R1,500,000

or SP<R2,000,000)• Equals: Net capital gain or loss

Capital Gains Tax Cont…


• Net capital gain (capital loss carried forward)• Taxable capital gain

Natural person: 25%Juristic person: 50%

• Included in taxable income

Foreign currency transactions


• Currency of transaction• Exchange rates• Foreign currency pools

Tax Compliance


• Provisional tax returns• Annual income tax return

Exchange Control


• Foreign investment allowance• Tax clearance application• Earning income offshore

Example (salary earner)


Income

Salary

Travel allowance

Travel deduction

Net travel allowance

Local interest

Less: exempt interest

Taxable interest

Income

R60,000

-R40,000

R6,000

-R6,000

R300,000

R20,000

R0

R320,000

Deductions

Pension/Retirement annuity

Medical

R22,000

R18,000

Taxable income R280,000

Example (trader)


EXAMPLE 1Gross income

Profit from trading

Brokerage/Commission income

Local interest received

Foreign interest/dividends received

Local dividends received

Gross income

R300,000

R50,000

R10,000

R4,000

R3,000

R367,000

Less: Exempt income

Foreign interest and dividends

Local interest

Local dividends

Income

R3,200

R10,000

R3,000

R350,800

Example (trader) Cont…


EXAMPLE 1 CONT…Income R350,800

Less: Expenses

Commissions

Monthly download fees

Telephone/Internet fees

R40,000

R2,400

R6,000

Less: Allowances

Wear and tear: Computers R3,000

Taxable income R299,400

Example (trader) Cont…


EXAMPLE 2

Closing balance on account @ 28/29 February

Less: Opening balance on account @ 1 March

Less: Funds transferred into account

Plus: Funds transferred out of account

Net profit/loss from trading activities

Less: Foreign interest and dividends (up to exemption limit)

Less: Local interest received (up to exemption limit)

Less: Local dividends received

Income from trading activities

Less: Expenses/Allowances

Taxable income

R147,000

-R30,000

-R50,000

R300,000

R367,000

-R3,200

-R10,000

-R3,000

R350,800

-R51,400

R299,400

Disclaimer


This training is intended to give you an understanding of the tax principles affecting

taxpayers and help you understand some tax terminology. Accordingly, the information

supplied by the presentation and presenter does not constitute any form of tax opinion that can be relied upon by taxpayers in the

preparation of their tax returns.

Contact details


• Web-site: www.kellyandkinder.co.za• E-mail: [email protected]• E-mail: [email protected]• Cell: Robin – 083 651 3374• Cell: Phil – 083 635 9029• Office: 031 765 3468

TAX TRAINING FOR TRADERS Iquote Trading TRAINING DOCUMENT.

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