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Does provisional income/ capital gains count towards income iro RA contributions?

Posted 1 December 2015 under Tax Questions



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G says:
30 November 2015 at 17:19

I own a business and I draw a standard non- pensionable salary of R1 440 000 (120K p/m). I pay R360k (30k p/m)to an RA. Which means I actually don't earn enough to achieve the max tax destructibility for my RA. However this year for the first time I have other income from share sales (my share trading G&L statement currently reflects a gain of 264K). Will this income add to the non-pensionable salary above and thereby reduce the disallowed portion of the RA Contribution?

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TaxTimTaxTim says:
1 December 2015 at 11:30

Is your business registered as a company?
Is your share trading account in your personal name?


G says:
1 December 2015 at 11:58

My business is a CC and the share trading account is in my personal name.


TaxTimTaxTim says:
1 December 2015 at 18:33

I am assuming you are not a share trader, in which case your gain on share sales is a capital gain. Capital gains are specifically excluded from the definition of non-pensionable income and therefore would not be included in the calculation of the RA deduction that you can claim.


G says:
1 December 2015 at 18:35

OK thanks, How does one define a share trader?


TaxTimTaxTim says:
1 December 2015 at 21:39

This would be someone who actively trades by buying and selling shares over a short term with the intention of making a profit (as opposed to someone who buys and holds for 3 or more years in order to grow their investment).


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