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Capital Gains Tax on EQUITIES
Rank: Elder Joined: 9/23/2009 Posts: 8,083 Location: Enk are Nyirobi
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Swenani wrote:MaichBlack wrote:Swenani wrote:Mart_Consult wrote:Sparkly et al, help me out on this one kindly...
A more interesting scenario is how will they treat bonus shares issued...for instance, after Longhorn's Bonus isssue in the year just concluded, my average buying price came to 6.5...if I sold today at 10...and considering I bought the whole lot at 16...will they consider it as a Capital loss or recalculate and use 6.5 as the buying price (which is not feasible as I actually paid 16/share, the rest were at 0/share) ???
Same goes for rights issues...my average buying price goes down after most rights...so shouldn't I be claiming Cap losses on all these trades??? Let me try to calculate the gains for you using nominal figures 1.You bought 1,000 shares at Kshs 10 which translates to acquisition value of Kshs10,000 2.While still holding the shares,you are issued with 100 bonus shares 3.One year down the line you dispose off the 1,100 shares at Kshs 11 calculation of CGT(assumption is that transaction costs is 2.5%First 1,000 shares 5%{(1000*11)-(1000*10)-275)}=36.25 Next 100shares
5%{(100*11)-(100*0)-27.5}=53.625Total CGT to be paid=(36.25+53.625)=Kshs 89.875 Aren't bonus shares given in lieu of cash dividends and subjected to withholding tax??? How do you charge withholding tax and CGT on the same shares??? And in any case bonus shares are not free!!! You actually "buy" them "by force". The money you would have been given as dividends pays for the "bonus share". How then do you use an acquisition cost of 0 in your calculations?? For those who have done financial management and corporate finance,Bonus shares are NEVER and SHOULD'NT be issued in lieu of dividend, bonus shares are more of a share split than dividends-they increase the number of shares but not the share capital-If they were dividends you would'nt expect the dilution of the share price and if you were to assume that the bonus shares are dividends. A company has no RIGHT to force you to take a share capital in lieu of a cash dividend;but a company is allowed to provide an option for the shareholders to take either cash dividends or stock dividends.A stock dividend will result in an increase of both share capital and number of shares! But anyway, if you take the bonus issue as dividends, you will still end up paying the same amount of CGT as as the person who considered it as a stock split.Since it will be a capitalized gain which will be taxed at disposal! True Bonus share is not an income. Life is short. Live passionately.
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Rank: Member Joined: 6/10/2006 Posts: 201 Location: Nairobi
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Question. Do we pay CGT when selling only?
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Rank: Member Joined: 6/14/2010 Posts: 521 Location: Nairobi
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sizzla wrote:Question. Do we pay CGT when selling only? Yes.Unlike broker commission.
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Rank: Member Joined: 1/25/2010 Posts: 344
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sizzla wrote:Question. Do we pay CGT when selling only? you cannot make a gain when buying
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Rank: Elder Joined: 4/22/2009 Posts: 2,863
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The optimist wrote:sizzla wrote:Question. Do we pay CGT when selling only? Yes.Unlike broker commission. Can't believe somebody has attempted to answer such a difficult question. IF YOU EXPECT ME TO POST ANYTHING POSITIVE ABOUT ASENO, YOU MAY AS WELL SIT ON A PIN
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Rank: User Joined: 1/20/2014 Posts: 3,528
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mwenza wrote:The optimist wrote:sizzla wrote:Question. Do we pay CGT when selling only? Yes.Unlike broker commission. Can't believe somebody has attempted to answer such a difficult question.  Formal education will make you a living. Self-education will make you a fortune - Jim Rohn.
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Rank: Hello Joined: 5/10/2012 Posts: 9
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Find basic information on the CGT here: http://www.kra.go.ke/not...ains-Tax-Guidelines.pdf
My main worry is in properties. If you bought a plot and developed a house for sale. How are they going to determine my total costs at the point of selling the house? If I bought the plot 10 years ago, there is the opportunity cost of my money that has been held there. They shouldn't just assume that the new price of the plot is all capital gain.
The goal is not to be the richest man in the cemetery; Enjoy life while you can.
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Rank: Elder Joined: 7/21/2010 Posts: 6,185 Location: nairobi
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Lets know here when someone pays especially in equities "Don't let the fear of losing be greater than the excitement of winning."
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Amicus Curiae wrote:Find basic information on the CGT here: http://www.kra.go.ke/not...ains-Tax-Guidelines.pdf
My main worry is in properties. If you bought a plot and developed a house for sale. How are they going to determine my total costs at the point of selling the house? If I bought the plot 10 years ago, there is the opportunity cost of my money that has been held there. They shouldn't just assume that the new price of the plot is all capital gain. Total costs for the house=Cost of acquisition+stamp duty+land rates(before and after construction)+construction costs+repair costs. The opportunity cost is not considered a costs since the other potential gain would still be taxed(either through income taxe, withholding taxor CGT) If Obiero did it, Who Am I?
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Rank: Member Joined: 8/14/2009 Posts: 244
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mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off?
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Rank: Elder Joined: 7/22/2009 Posts: 7,468
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stock.enigma wrote:mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off? This question has been answered so many times on this thread. Never count on making a good sale. Have the purchase price be so attractive that even a mediocre sale gives good returns.
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Rank: Elder Joined: 6/2/2011 Posts: 4,818 Location: -1.2107, 36.8831
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stock.enigma wrote:mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off? NOPE. No carrying forward anything. You make a profit, you pay CGT. You make a loss, you don't pay CGT. And that is my problem with this CGT. Even a scenario where you bought a stock in various lots and prices but you sell a price higher than the average selling price, shouldn't they consider the average buying price and the selling price? E.g Buy XXX Ltd at the following lots; 3,000 @ 3/- and 5,000 @ 2/-. Your average buy price is 2.375/-. Then sell everything @ 2.6/-. Wouldn't it be fair if they just took (2.6-2.375) for 8,000 shares, instead of (2.6-2)/- for 5,000 shares. Receive with simplicity everything that happens to you.” ― Rashi
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Rank: New-farer Joined: 10/2/2012 Posts: 21
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dunkang wrote:stock.enigma wrote:mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off? NOPE. No carrying forward anything. You make a profit, you pay CGT. You make a loss, you don't pay CGT. And that is my problem with this CGT. Even a scenario where you bought a stock in various lots and prices but you sell a price higher than the average selling price, shouldn't they consider the average buying price and the selling price? E.g Buy XXX Ltd at the following lots; 3,000 @ 3/- and 5,000 @ 2/-. Your average buy price is 2.375/-. Then sell everything @ 2.6/-. Wouldn't it be fair if they just took (2.6-2.375) for 8,000 shares, instead of (2.6-2)/- for 5,000 shares. The loss may be carried forward to be offset/deducted against a gain of a similar nature (that is, a capital gain) at a future date. http://www.kra.go.ke/notices/pd...Gains-Tax-Guidelines.pdfMoney is like manure. You have to spread it around or it smells. ~ J. Paul Getty
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Rank: Member Joined: 8/14/2009 Posts: 244
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EndowGaze wrote:dunkang wrote:stock.enigma wrote:mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off? NOPE. No carrying forward anything. You make a profit, you pay CGT. You make a loss, you don't pay CGT. And that is my problem with this CGT. Even a scenario where you bought a stock in various lots and prices but you sell a price higher than the average selling price, shouldn't they consider the average buying price and the selling price? E.g Buy XXX Ltd at the following lots; 3,000 @ 3/- and 5,000 @ 2/-. Your average buy price is 2.375/-. Then sell everything @ 2.6/-. Wouldn't it be fair if they just took (2.6-2.375) for 8,000 shares, instead of (2.6-2)/- for 5,000 shares. The loss may be carried forward to be offset/deducted against a gain of a similar nature (that is, a capital gain) at a future date. http://www.kra.go.ke/notices/pd...Gains-Tax-Guidelines.pdf Thanks for the clarification. You do not pay CGT until you cover all your losses, and that may extend to long periods depending on the level of activity of similar nature.
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Rank: User Joined: 1/20/2014 Posts: 3,528
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stock.enigma wrote:EndowGaze wrote:dunkang wrote:stock.enigma wrote:mlennyma wrote:Lets know here when someone pays especially in equities I am interested to know what happens if I make a loss in selling equities. For example, I bought Mumias at ksh6, and as it is now, I may sell at Khs2, realizing a loss of Ksh4. Shall I carry-forward the loss? and how do I set it off? NOPE. No carrying forward anything. You make a profit, you pay CGT. You make a loss, you don't pay CGT. And that is my problem with this CGT. Even a scenario where you bought a stock in various lots and prices but you sell a price higher than the average selling price, shouldn't they consider the average buying price and the selling price? E.g Buy XXX Ltd at the following lots; 3,000 @ 3/- and 5,000 @ 2/-. Your average buy price is 2.375/-. Then sell everything @ 2.6/-. Wouldn't it be fair if they just took (2.6-2.375) for 8,000 shares, instead of (2.6-2)/- for 5,000 shares. The loss may be carried forward to be offset/deducted against a gain of a similar nature (that is, a capital gain) at a future date. http://www.kra.go.ke/notices/pd...Gains-Tax-Guidelines.pdf Thanks for the clarification. You do not pay CGT until you cover all your losses, and that may extend to long periods depending on the level of activity of similar nature. Formal education will make you a living. Self-education will make you a fortune - Jim Rohn.
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Rank: Veteran Joined: 4/16/2014 Posts: 1,420 Location: Bohemian Grove
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My payout has just checked in.Only 1.83% deducted n no CGT.
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Rank: Veteran Joined: 9/18/2014 Posts: 1,127
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whiteowl wrote:My payout has just checked in.Only 1.83% deducted n no CGT. Awesome.looking to cash out pretty soon The main purpose of the stock market is to make fools of as many people as possible.
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Rank: Elder Joined: 6/23/2009 Posts: 13,568 Location: nairobi
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lochaz-index wrote:whiteowl wrote:My payout has just checked in.Only 1.83% deducted n no CGT. Awesome.looking to cash out pretty soon Wewe andika andika hapa tu.. KRA itakufuata hadi ushangae
COOP 70,000 ABP 15.20; KQ 414,100 ABP 7.92; MTN 23,800 ABP 6.45
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Rank: Veteran Joined: 7/1/2014 Posts: 907 Location: sky
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1998 to be used as a base year for tax calculation There are only two emotions in the stock market, fear and hope. The problem is, you hope when you should fear and fear when you should hope
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Rank: Veteran Joined: 4/16/2014 Posts: 1,420 Location: Bohemian Grove
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obiero wrote:lochaz-index wrote:whiteowl wrote:My payout has just checked in.Only 1.83% deducted n no CGT. Awesome.looking to cash out pretty soon Wewe andika andika hapa tu.. KRA itakufuata hadi ushangae @Obiero Ile siku nitashikwa na KRA pia wewe utashikwa na CMA kwa kuhubiri na kutabiri bila kibali
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