1. TAX TRAINING FOR TRADERS Iquote Trading TRAINING DOCUMENT

2. Contents 19 September 2015 2 Tax Training for Traders Welcome and introductions Tax principles Foreign currency transactions Tax compliance Exchange control Examples

3. Tax Principles 19 September 2015 3 Tax Training for Traders Tax concept of “trade” Any activity conducted and any trade or profession, eg salary, renting property, trading in CFD’s

4. Tax Principles Cont… 19 September 2015 4 Tax Training for Traders Per Trade Gross income  Amounts received not of a capital nature  Shares vs CFD’s and Futures  Disposal of shares deemed to be capital  Schemes of profit-making  Brokerage income

5. Tax Principles Cont… 19 September 2015 5 Tax Training for Traders 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

6. Tax Principles Cont… 19 September 2015 6 Tax Training for Traders Per Trade Income Less: Expenses/Losses  In the production of income  Not of a capital nature Less: Deductions/Allowances Equals: Taxable income/loss

7. Tax Principles Cont... 19 September 2015 7 Tax Training for Traders 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

8. Taxable Income 19 September 2015 8 Tax Training for Traders Taxable income Determine tax liability Less: Rebates Less: Foreign tax credits Equals: Tax payable

9. Expense Examples 19 September 2015 9 Tax Training for Traders Direct expenses  Monthly update fees  Telephone/Internet  Commissions paid  Entertainment/Refreshments Motor vehicle expenses  Business vs private

10. Expense Examples Cont… 19 September 2015 10 Tax Training for Traders Home office expenses  Interest & insurance  Electricity & water  Rates  Cleaning

11. Deductions/ Allowances 19 September 2015 11 Tax Training for Traders Repairs Wear and tear  Computer  Office equipment  Software Pension/RA/Medical

12. Disallowed Expenses 19 September 2015 12 Tax Training for Traders Personal expenses Suspect trades Re-imbursable expenses

13. Capital Gains Tax 19 September 2015 13 Tax Training for Traders Per asset Proceeds Less: Base cost  Pre-valuation date asset  Post-valuation date asset Equals: Capital gain or loss

14. Capital Gains Tax Cont… 19 September 2015 14 Tax Training for Traders 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

15. Capital Gains Tax Cont… 19 September 2015 15 Tax Training for Traders Net capital gain (capital loss carried forward) Taxable capital gain  Natural person: 25%  Juristic person: 50% Included in taxable income

16. Foreign currency transactions 19 September 2015 16 Tax Training for Traders Currency of transaction Exchange rates Foreign currency pools

17. Tax Compliance 19 September 2015 17 Tax Training for Traders Provisional tax returns Annual income tax return

18. Exchange Control 19 September 2015 18 Tax Training for Traders Foreign investment allowance Tax clearance application Earning income offshore

19. Example (salary earner) 19 September 2015 19 Tax Training for Traders 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

20. Example (trader) 19 September 2015 20 Tax Training for Traders EXAMPLE 1 Gross 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

21. Example (trader) Cont… 19 September 2015 21 Tax Training for Traders EXAMPLE 1 CONT… IncomeR350,800 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

22. Example (trader) Cont… 19 September 2015 22 Tax Training for Traders 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

23. Disclaimer 19 September 2015 23 Tax Training for Traders 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.

24. Contact details 19 September 2015 24 Tax Training for Traders Web-site: www.kellyandkinder.co.zawww.kellyandkinder.co.za E-mail: robin@kellyandkinder.co.zarobin@kellyandkinder.co.za E-mail: phil@kellyandkinder.co.zaphil@kellyandkinder.co.za Cell: Robin – 083 651 3374 Cell: Phil – 083 635 9029 Office: 031 765 3468