Kindly what tax implication are there in forex trading and when do they apply. Glad to help you with your question. FOREX is therefore your trading stock. You buy and sell it for a profit. The first part of the definition says: Bear in mind that foreign currency options contracts and foreign exchange contracts both defined in section 24I are specifically excluded from the definition of trading stock. Foreign currency is not excluded from the definition of trading stock.
When you sell the forex, that will be gross income as defined in section 1. Any opening and closing stock balances at the beginning or end of the year of assessment will be treated according to sections 22 1 and 22 2 ; i.
In essence, you are taxed on your profit from trading. However, section 24I is also applicable. It deals with the gains and losses from foreign exchange transactions. Exchange item includes a unit of currency. The exchange difference definition in substance requires that you calculate the gain or loss on the currency bought and sold.
You should convert that gain to rands using the exchange rates applicable on the day the currency was bought and sold. The profit from the trade will be added to taxable income while the loss will decrease taxable income. In the case where the currency was bought but remains unsold at the end of a tax year, you would calculate the rand value of the currency at the time you bought it.
The gain or loss calculated would also be included in taxable income. From the above you can see that both sections 24I and sections 22 and 25D are applicable. The answer lies in section 24I 6: Therefore section 24I applies instead of sections 22 and 25D.
TaxStudents Staff answered 4 years ago. Popular Taxchats Can one claim advertising expenses once off website design as a deductible expense under the general deductions formula?
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