How does SARS decide if I am a share trader or an investor?

By your intention, inferred from your conduct: how long you hold, how often you trade, whether you borrowed to buy, and whether you are after long-term growth and dividends or short-term profit. Frequent short-term dealing points to trading (income tax); holding for years points to investing (capital gains tax). It is a facts-and-circumstances test, not a label you pick.

What is the three-year rule for shares?

Section 9C deems equity shares held for a continuous period of at least three years to be capital in nature on disposal. Once you have held listed equity shares for three years or more, the profit is a capital gain taxed under CGT, no matter what your original intention was. It gives long-term shareholders certainty and removes the trader-versus-investor argument for those shares.

Is capital gains tax really lower than income tax on shares?

For a profitable disposal, yes. An individual includes only 40% of a capital gain in taxable income after the R40,000 annual exclusion, giving a maximum effective rate of 18%. Trading profit is fully taxable at your marginal rate, up to 45%. On a R200,000 gain at the top rate, that is roughly R28,800 versus R90,000.

Can I deduct my trading losses and costs?

If you are taxed on revenue account as a trader, yes: trading costs are deductible and a trading loss can reduce other income, subject to the ring-fencing rules for certain trades. An investor on capital account cannot deduct running costs against a gain, and a capital loss offsets only capital gains, not salary.

- https://www.sars.gov.za/types-of-tax/capital-gains-tax/ - https://www.sars.gov.za/types-of-tax/capital-gains-tax/proceeds/calculation-of-taxable-capital-gains-and-assessed-capital-losses/annual-exclusion/ - https://www.sars.gov.za/tax-rates/income-tax/capital-gains-tax-cgt/ - https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-for-individuals/

Share Trader vs Investor: How SARS Taxes Your Shares

Whether SARS taxes your share profits as capital gains or as ordinary income depends on why you hold the shares, not on how the trading platform labels you. An investor who buys shares to hold them for growth and dividends is taxed on capital account: the gain goes through capital gains tax, where the maximum effective rate for an individual is 18%. A trader who buys and sells to profit from short-term price movements is taxed on revenue account: the profit is ordinary income, taxed at marginal rates up to 45%. The gap between the two is large, so the distinction is worth getting right.

There is one firm rule that removes the argument for long-held listed shares, and we come to it below.

The two tax treatments

On capital account, your profit is a capital gain. For the 2026 year of assessment an individual deducts the annual exclusion of R40,000 from total gains, includes 40% of the remainder in taxable income, and that included amount is taxed at your marginal rate. The maximum effective rate works out to 18%.

On revenue account, there is no annual exclusion and no 40% inclusion. The full profit is added to your taxable income and taxed at your marginal rate, which for a high earner is 45%. The flip side is that a trader on revenue account can deduct trading expenses and can set a trading loss off against other income, which an investor generally cannot do with a capital loss.

How SARS decides which one you are

SARS looks at your intention, judged from what you actually did rather than what you say. The factors that point towards trading (revenue account) include a short holding period, frequent buying and selling, borrowing to fund the purchases, and a scheme of profit-making rather than long-term holding. The factors that point towards investing (capital account) include holding for years, buying for dividend income and growth, and infrequent dealing.

No single factor decides it. A person can even be an investor for some holdings and a trader for others, if the intention genuinely differs between them.

The three-year rule that settles it: section 9C

For listed shares there is a safe harbour. Under section 9C, equity shares held for a continuous period of at least three years are deemed to be held on capital account when you sell them. Once you cross that three-year line, the proceeds are treated as a capital gain regardless of whether your original intention looked like trading. This gives long-term shareholders certainty: hold your JSE equity shares for three years or more and the profit is a capital gain, taxed under CGT, not ordinary income.

The rule cuts the argument out. Below three years the intention test still applies; at three years and beyond, section 9C decides it for you.

A worked example

Take an investor and a trader who each make a R200,000 profit on JSE shares in the 2026 tax year, and assume each is already in the top 45% marginal bracket so the comparison is clean.

The investor (capital account):

R200,000 gain, less the annual exclusion R40,000 = R160,000 net gain. Included at 40%: R160,000 x 40% = R64,000 added to taxable income. Tax at 45%: R64,000 x 45% = R28,800. Effective rate on the R200,000 gain: about 14.4%.

The trader (revenue account):

R200,000 profit, no exclusion, no inclusion rate. The full R200,000 is added to taxable income. Tax at 45%: R200,000 x 45% = R90,000.

Same R200,000 profit, but R28,800 of tax as an investor against R90,000 as a trader, a difference of R61,200. That is the cost of being on the wrong side of the line. You can model the capital gains side in the capital gains tax calculator.

What each side can and cannot do

A trader deducts costs. Brokerage, data subscriptions and interest on money borrowed to trade are deductible against the trading income, and a net trading loss can reduce other taxable income, subject to the loss ring-fencing rules. An investor cannot deduct those running costs against a capital gain, and a capital loss can only be set off against capital gains, not against salary.

So the revenue treatment is not always worse. It is worse when you are profitable at a high marginal rate, and it can be better in a loss-making year. What you do not get is a free choice: SARS applies the treatment your actual conduct supports, with section 9C overriding it for listed shares held three years or more.