EasyEquities Tax Guide: How Your Investments Are Taxed

EasyEquities Tax Guide: How Your Investments Are Taxed

If you’re investing through EasyEquities, understanding how your returns are taxed is just as important as choosing the right shares or ETFs. Taxes can eat into your profits if you’re not aware of the rules — but with a little knowledge, you can plan smarter and keep more of what you earn. Here’s a clear breakdown of how different taxes apply to your EasyEquities investments in South Africa.

1. Capital Gains Tax (CGT): When You Sell at a Profit

Whenever you sell a share or ETF for more than what you paid, the profit is called a capital gain. In South Africa, this is subject to Capital Gains Tax (CGT).

How it works:

You only pay CGT when you sell your investment — not while it’s growing.

1. The first R40,000 of your total annual capital gains is exempt from tax.
2. Only 40% of the remaining gain is added to your taxable income.

The rate you ultimately pay depends on your income tax bracket.

Example:
If you make a R50,000 profit from selling shares:

• R40,000 is tax-free.
• R10,000 is taxable at 40% = R4,000 added to your taxable income.
• If your marginal tax rate is 30%, you’ll pay R1,200 in CGT.

💡 Tip: Long-term investors benefit most here — CGT is only triggered when you sell, so holding onto good investments can delay the tax bill.

2. Dividends Tax: When Companies Pay You

If your shares or ETFs pay dividends, you’ll receive a portion of the company’s profits. These are taxed at a flat 20% dividends withholding tax before you even see the payout.

What you need to know:

1. EasyEquities automatically deducts this tax — no action needed on your part.
2. The net dividend you receive has already been taxed.
3. If you invest in international shares, the withholding tax might differ depending on the country.

💡 Tip: If you’re investing through a Tax-Free Savings Account (TFSA), dividends are completely tax-free — no deductions at all.

3. Interest Income: Mostly for Money Market or RA Accounts

If you hold funds that generate interest income, such as cash in your EasyEquities account or fixed-income ETFs, that interest may also be taxed.

Key facts:

The first R23,800 (under 65) or R34,500 (65 and older) of interest income is tax-free per year.

Anything above that is taxed at your normal income tax rate.

4. Tax-Free Savings Account (TFSA): The Smart Tax Shelter

EasyEquities offers a TFSA option, which is one of the best ways to avoid taxes on your investments entirely.

Benefits:

• No tax on dividends
• No CGT on profits
• No tax on interest income

You can invest up to R36,000 per tax year, with a lifetime cap of R500,000.

💡 Tip: Stick within the limits — any excess contributions are taxed at 40%.

5. Retirement Annuities (RAs): Deferred Tax Benefits

EasyEquities also offers retirement investment options. With an RA:

1. Contributions are tax-deductible (up to 27.5% of your taxable income, capped at R350,000 per year).
2. Growth inside the RA is completely tax-free.
3. You’ll only pay tax when you withdraw during retirement — often at a lower rate.

6. Foreign Investments: Double Tax Agreements

When investing in international ETFs or stocks via EasyEquities:

• Dividends may be taxed in the foreign country first.
• South Africa often has Double Tax Agreements (DTAs) to prevent double taxation.
• You’ll usually get a credit for foreign taxes already paid.

7. Keeping Track: EasyEquities Makes It Simple

At the end of each tax year, EasyEquities provides you with tax certificates summarizing your:

• Dividends received
• Interest earned
• Capital gains and losses

You can use these when completing your SARS eFiling return.

Final Thoughts

Taxes don’t have to be intimidating — especially if you use the right accounts and hold your investments smartly. Whether you’re just starting on EasyEquities or managing a growing portfolio, understanding how taxes apply can help you make tax-efficient decisions and maximize your long-term returns.

Quick Recap:

• CGT – When you sell shares for a profit.
• Dividends tax – 20% withheld automatically.
• Interest tax – Exemptions up to R23,800.
• TFSA – 100% tax-free growth.
• RA – Tax benefits now, tax later at a lower rate.

📈 Invest smart, plan ahead, and let tax efficiency boost your EasyEquities journey.