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You already know how important it is to start investing. What you don’t know, is what the cost of your investments may be. Two types of investments may have identical returns, but the real returns – after fees and taxes – may be significantly different.

The information below will focus on the costs associated with investing in shares and how fees, levies and taxes applicable to an investment in equities can reduce your return on investment and your ability to attain your financial goals.

It is, however, important to note that despite the associated cost of an investment in shares, over the long term, the investment will tend to outperform all other asset classes.

Examples of charges applicable to an investment in shares:

Deposit fees or withdrawal fees

  • Normally, there is no deposit fee on your initial investment, but it is important to enquire regarding a withdrawal fee.

Brokerage or transaction fee

  • Brokerage is the transaction fee associated with the transaction, and applies to either buy or sell transactions.  Transaction fees could be subject to a minimum fee which varies from broker to broker or subject to a percentage of the trade value.
  • Brokerage is normally calculated on a sliding scale with a minimum brokerage of 0.35%.

Account opening fee

Some brokers may charge a fee for opening an account.

Fees charged by the JSE for ad hoc services

Fees are normally quoted as VAT exclusive, but VAT is added on at the current rate of 15%.


  • To provide a settlement service for the transfer of shares between parties, Strate charges a flat settlement fee at a fixed rate of 0.075% of the transaction value.
  • Securities Transfer Fees (STT) are set at 0.25 % of the trade value.
  • Investor Protection levy may be charged at 0.0002% of trade value.


Tax is a compulsory financial charge imposed by the government on taxpayers to help fund government spending.

Tax applicable to a share portfolio includes:

Income Tax:

Income tax refers to tax payable by taxpayers on income generated.  The frequent buying and selling of shares over a short period are treated as income (speculation) and will form part of your income, as if it is a normal trading activity.

Income tax on profit made from trading in shares, is calculated on a sliding scale according to your income earned (called your marginal tax rate) as tax tables.

Capital Gains Tax

A capital gain arises when you dispose of an asset (as defined in the Income Tax Act) on or after 1 October 2001 for proceeds that exceed its base cost.

The capital gain from the sale of an investment in shares that was held for a period of 3 years and longer are treated as a capital gain.  Any gains associated when these shares are sold, attracts Capital Gains Tax (CGT).

CGT is not a separate form of Income Tax but, should a type of income be regarded as a capital gain (rather than a gain which is income in nature), this amount will only be included in taxable income at the current inclusion rate of (currently) 66.67% of the gain, if you are an Individual taxpayer.  A further exemption of R40,000 is granted on any capital gain made by an individual investor.

Value Added Tax (VAT) is applicable on the following charges:


  • Brokerage fee
  • Securities transfer fee
  • Investor protection levy

Dividends Withholding Tax

When a company declares dividends, (the portion of profits a company pays to its investors), the dividend payments are taxed at a flat rate of 20%, in the case of individual investors.  Certain exemptions apply when the investor is a private company.

When the company pays dividends to investors, Dividends Withholding Tax (DWT) is deducted from the dividends and paid to the South African Revenue Service (SARS), on behalf of the investors.

Despite the overall cost associated with an investment in shares, over time it will provide returns exceeding the costs thereof.

For more information on the opening of an online share account, you can consult with MyWealth Investments.

The information provided in this article is for information purposes only and should not be considered as financial advice.

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Regenesys Business School

Regenesys Business School

Author Regenesys Business School

Regenesys Business School

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