DIY Portfolio Management Support Club

Staff: Charles Hattingh, Colette Spear (daughter) and Jade Spear (granddaughter)

Telephone: 011 476-3626 Web: Email:

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CGT assessed loss brought forward

There was no place in the 2017 tax return for a CGT loss brought forward so I assumed (bad idea) that SARS would automatically bring it forward to the current year. My wife submitted her return. There was no tax payable because of the loss carry forward from 2016. Within a day the following series of SMSs arrived:

“Dear Taxpayer, your account is in arrears, make urgent payment to avoid legal action.”

“Dear Taxpayer, you have incorrectly received an SMS that your account is in arrears. Please ignore the SMS. We apologise for any inconvenience.”

“Dear Taxpayer, Make payment urgently or legal action will be taken.”

Clearly she was traumatised by these SMSs. If I was not around to defend her she would assume that the assessment by SARS was correct and pay the amount, which is substantial.

I published the above story in the Hedgehog Feedback last month and a proactive Hedgehog participant, who is on SAICA’s tax committee, reported it to SARS. Here is the response I got from him:

“I received feedback from the SARS execs this week. They suggest we submit an objection and Section 93 request for correction by SARS as this is an undisputed SARS error. Then I can send them the documents to correct the system error. Can I suggest that we do this?” Forget it mate! I pay taxes. They earn salaries I could only have dreamed about earning as a teacher during my lifetime. And they want me to do their work for them??? This is their problem, not mine. Let them take her to court.

Another tax issue

Nedbank, my stockbroker, calculated the base price of the sale of my shares in AVI using LIFO instead of weighted average. They got all the other base prices right except for that on the sale of Bidvest. Had I used their base prices I would have been allowed a deduction against the proceeds from my sales of R1 053 491. The correct base cost was R746398. What would you do in my situation? Being me, I claimed the lower figure. I refuse to compromise my integrity. I will report back on SARS’s reaction to this.

When your portfolio really matters

One of our Hedgehog cousins retired recently. His report-back to me was: “All of a sudden you look at your portfolio in a totally different light when you realise that you have to live off its returns.” I experienced the same wake-up call last year when I decided to cut down on my workshops. His comment to me was that one should anticipate this ahead of time and nurture your portfolio accordingly. Young people cannot understand this.

Front page of the Citizen

“Many people buy savings or investment products and don’t know what’s happening with them. Why, when it comes to investments, does common sense fall by the wayside?”

I have just processed a Hedgehog return where the investor bought a share for R108k and sold it two days later for R97k. My analysis of this share in Map 3 shows that the share is grossly over-valued. On what evidence was his decision based? He has access to my database. There is no excuse. See the next paragraph.

Read this carefully, a few times

From one of my Hedgehog cousins: “A beginner has no right to a gut feel. You will always be a beginner if you do not study the material that Charles gives you. If you do not keep detailed records of why you bought or sold a share you will never learn from your mistakes or your successes. You need to come to a “Damascus” moment about the non-prioritising of your wealth creation mission. I am going to stop buying and selling shares on my gut feel. I am first going to educate myself. If I do not have a clear understanding of why a share should be on my watch-list, I would rather keep the shares I have. They are as good as any if I am just buying or selling on a whim.” She is brilliant. This is why women make better investors than men! Common sense personified.

From another Hedgehog cousin

In response to my lament that I invest massive energy into the Portman programme and people do not bother to read the emails I send them, one of our Hedgehog cousins sent me the following little story by Loren Eiseley:

“While wandering a deserted beach at dawn, stagnant in my work, I saw a man in the distance bending and throwing as he walked the endless stretch toward me. As he came near, I could see that he was throwing starfish, abandoned on the sand by the tide, back into the sea. When he was close enough I asked him why he was working so hard at this strange task. He said that the sun would dry the starfish and they would die. I said to him that I thought he was foolish. There were thousands of starfish on miles and miles of beach. One man alone could never make a difference. He smiled as he picked up the next starfish. Hurling it far into the sea he said, "It makes a difference for this one." I abandoned my writing and spent the morning throwing starfish.”

I have been privileged to have met so many beautiful people in the work I do. Thank you so much Charl for this. His point was that I have made a difference to his life.

One of these stories is enough – no more please. I feel much better now so back to business.

May I wish you a peaceful festive period and the best of luck in your investment endeavors in 2018.

Kind regards,

Charles Hattingh

November 2017