Tax on trading in your country

SARS looks at two things: how often you trade and how much planning sits behind each trade. Frequent, short-term trades point to revenue. Occasional trades held for months point to capital gains. No single trade count decides it. The pattern across a tax year decides it.

Revenue is added to your other income and taxed at your marginal rate. Capital gain is treated differently. A portion of the gain is included in your taxable income, and the rest is not taxed. That is why the same rand amount can leave you with different after-tax results.

The difference is not small. On a R10,000 gain, the revenue route can cost you far more than the capital gains route. The exact amounts depend on your total income and the rates for the year. Those rates change, so check the current SARS tables rather than relying on a figure from an old article.

You do not choose the label that suits you. SARS can reclassify a gain if your activity looks like a business. Keeping clean records is how you show which side of the line your trading sits on.

The FSCA regulates the market and the firms that operate in it. It does not collect tax and it does not ask for your trading records. A broker may be licensed by the FSCA, but that licence says nothing about your tax position.

A licensed broker will usually send you contract notes and statements. Those documents are your raw material. They show the date, the instrument, the price, the size and any fees. Without them you are guessing.

Some brokers report to SARS, some do not. That varies between brokers, and it can vary between products at the same broker. Do not assume silence means invisibility. Keep your own records either way.

Start with a single spreadsheet. One row per trade. Columns for the date you opened, the date you closed, the instrument, the size, the entry price, the exit price, the fees and the rand result. Add a column for why you took the trade.

Keep the contract note for every trade. Keep the monthly statement for every month you traded. Keep the bank deposit or withdrawal that moved money to or from the broker. These three sets of documents cross-check each other.

Do not mix personal and trading money in one bank account. A separate account makes the trail obvious. If you cannot open a second account, label every transfer clearly and keep a running total.

Update the spreadsheet weekly. Ten minutes a week beats ten hours in a panic. If SARS asks about a trade two years later, you will have the date, the instrument, the rand amount and the reason. That is what they want to see.

The R180.00 net from the example is not yet a tax figure. Costs you can set against the gain depend on how SARS classifies the trade, and the two classifications allow different deductions. Revenue treatment generally lets you subtract spread, commission and overnight financing before tax. Capital treatment generally does not, though it may allow the annual capital gains exclusion and a lower effective rate. The same R180.00 can therefore produce two different tax outcomes.

South African tax rates, thresholds and rebates change with each Budget, and they depend on your total income, not on trading alone. No single rate applies to everyone, and none is quoted here. What stays constant is the arithmetic: gross rand gain, minus allowable costs, gives the taxable amount. Whether a cost is allowable is the question to put to a registered tax practitioner, not to a broker's support desk.

One practical split keeps this manageable. Run trading money through a bank account separate from the one holding your salary, and label each deposit with the trade it came from. When the classification question arises, the bank record answers it without guesswork. The figures you keep are the ones that let someone else check the sum, not the ones that make it look best.