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Tax on local based foreign currency accounts

Posted 3 September 2015 under Tax Questions



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Jay says:
20 August 2015 at 20:12

How is tax caculated on a local foreign currency account. Example: Savings of $100. Worth R1000 but worth R1200 due to currency changes at end of year. And also interest of R50.

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TaxTimTaxTim says:
24 August 2015 at 8:10

Do you receive this money into your local account or is it only kept in foreign accounts?


Jay says:
24 August 2015 at 19:53

Thank you for prompt reply. It is only kept in local foreign account with a local bank. It is some of the money from my locally earned salary which gets deposited in my local cheque account which I just transfer to the foreign currency account which a service provided by the same local bank. The money is converted to dollars in that account. Aim is just to save basically in a currency other than the rand.


Jay says:
24 August 2015 at 20:00

Also I am a government employee with a persal number. So I believe the salary earned has had tax deducted already. I basically transfer a small amount from my cheque account to the foreign currency account.


TaxTimTaxTim says:
25 August 2015 at 16:22

So essentially the only money you earn in that account is a foreign exchange and interest? You did not earn actual income in a foreign currency?


Jay says:
25 August 2015 at 22:57

Thats correct. There is no actual income in foreign currency. I am querying about the general fluctuations in the currency exchange and interest. Its it treated as a capital gain? Or is only the interest taxable?


TaxTimTaxTim says:
28 August 2015 at 10:48

Unless you are buying and selling the foreign currency then you will not be taxed on the movements, similar to share trading, you won't be taxed on the changes until you have disposed of the item. However cash is not subject to capital gains tax anyway and unless you are a trader then only the interest would be taxable at the average exchange rate SARS provides each year.


Jay says:
28 August 2015 at 12:09

Thank you for the excellent service you provide.

Regards


TaxTimTaxTim says:
3 September 2015 at 11:56

Only a pleasure!


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