Q & A GotMail STT listing
Dear BTM, I have noticed there is an amount for STT listed on my broker`s statement. What does this mean? Gillian
Dear Gillian, STT refers to Security Transfer tax which is levied on every transfer of a security and has been applicable since 1 July 2008. In essence, a security refers to any:
Member’s interest in a Close corporation (CC); or
Share in a company;
Any right or entitlement to receive any distribution from a company or CC.
The tax rate is 0, 25%, to be applied to the taxable amount in respect of any transfer of a security.
Tax-deductable instalments Dear BTM,
Are the instalments for my car and house deductible for tax purposes? Kevin
Dear Kevin,
Instalments consist of two sections, namely interest and capital. The VAT can be claimed as input VAT on initial purchase price of vehicle if both parties are VAT vendors. It is compulsory for a business to register for VAT after achieving a R1, 000,000 turnover per annum and optional after R50, 000.
Month 0
1 2 3 4 5 6 7 8 9
10 11 12
Payments Capital
44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.83 44,190.82 530,289.95
39,607.50 39,970.57 40,336.96 40,706.72 41,079.86 41,456.43 41,836.45 42,219.95 42,606.96 42,997.53 43,391.67 43,789.42 500,000.00
To avoid getting too technical, in short, your vehicle or house will be capitalised as an asset and shown in the Statement of Financial position, (better known as the Balance sheet). The interest part may be deductible from income tax if the vehicle or property was purchased for a business. There is no VAT payable on the interest as it is a financial service. We have added an amortisation
table above to indicate that at the start of any loan repayment, you will initially start paying majority interest and more capital at the end.
BTM experts answer your questions
Interest (11%) Balance
4,583.33 4,220.26 3,853.87 3,484.11 3,110.97 2,734.40 2,354.38 1,970.88 1,583.87 1,193.30 799.16 401.40
30,289.95
If you were to increase your monthly loan to pay R25, 000 extra in three instalments to receive interest saving, you would save R6, 156.32 over this year. While this may not seem like a big amount since this is a short term loan, it would definitely have an effect on a longer term loans over 20-30 years. However, consider the following: If the net income of your business is very high, you might want to deduct the interest for taxable income. Redeeming a loan over the longer term will not affect cash flow as much.
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Beatthemarket.co.za | March 2012 page 5
500,000.00 460,392.50 420,421.94 380,084.98 339,378.26 298,298.40 256,841.97 215,005.52 172,785.58 130,178.61 87,181.09 43,789.42
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