Whether you are a share trader or a long-term investor, when you make a profit, SARS will want its slice of the pie.
EVER SINCE Biblical times there has been a tug-of-war between governments trying to extract as much as possible from its citizens in the form of taxes, and individuals trying to keep as much of their income and wealth away from those very same governments.
In South Africa, owners of shares have not historically needed to worry too much about the tax man—especially if they considered themselves to be long-term investors. This is because any profits made when shares held over long periods of time were eventually sold, were completely tax-free (as were all so-called ‘capital’ profits), while dividends have also for quite some time been tax-free in the hands of shareholders.
However, on 1 October 2001 the way South Africans think about tax was changed forever, for this was the day on which Capital Gains Tax (CGT) came into effect.
Share investors’ panic over CGT
Markets can be seen as a fascinating study in human behaviour, and this can be seen most clearly in how markets often tend to overreact to news. This tendency to overreact can also be seen in how people respond …
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