Are in­vest­ment clubs

Finweek English Edition - - MONEY -

Like sto kvel s, in­vest­ment clubs are not taxed. But are they re­ally a ve­hi­cle to use if you want to avoid hav­ing your in­vest­ments taxed?

Brown says there is no spe­cial tax dis­pen­sa­tion for stokvels/ in­vest­ment clubs. “Any tax li­a­bil­i­ties i ncurred are passed onto the in­di­vid­ual mem­bers. This is of­ten quite ef­fec­tive. For in­stance, each in­di­vid­ual tax­payer can in­cur cap­i­tal gains of R30 000 per year, be­fore CGT [cap­i­tal gains tax] is payable,” he says.

“So an in­vest­ment club/stokvel which has a R300 000 cap­i­tal gains tax li­a­bil­ity, but has 10 or more mem­bers, can pass this through to in­di­vid­ual mem­bers, who would not then be li­able for CGT, un­less they were in­cur­ring other CGT li­a­bil­i­ties else­where.”

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