30 March 2015

How GST affecting our Share investment?

This is another topic on GST awareness. This time we talk about share market investment, your share trading account and transaction costs. Every share investor should read this article. Let's start here...


Many share investors already started their "wait and see" approach since last week because many of us don't know how GST is going to impact our share investment after 1st April 2015.


Basically, each transaction consists of the following 3 types of charges:

  1. Brokerage fee
    Normally, the charge is 0.42% (online trading) and 0.60% (offline trading). Some of you may find it to be as low as 0.10% (intraday trading). Yes, this fee is subject to 6% GST. After 1st April, it will become 0.4452% (online trading) and 0.636% (offline trading).

  2. Clearing fee
    This fee is basically charged by Bursa Malaysia and it was fixed at 0.03% of the transaction amount. Yes, this fee is also subject to 6% GST and it will become 0.0318% after this.

  3. Stamp Duty
    This is calculated as RM1 stamp duty for every RM1,000 trading value. Since this is another form of tax by government, stamp duty is NOT subject to GST. Remained unchanged.



In order to have a clearer picture, let's take an example of a 1,000 share of Maybank RM9.25 currently. The total trading value will be RM9,250.
  • Before 1st April, the total cost will be
    • Brokerage fee 0.42% = RM38.85
    • Clearing fee 0.03% = RM2.775
    • Stamp duty = RM10
    • Total transaction cost = RM51.625

  • After 1st April, the total cost will be
    • Brokerage fee 0.4452% = RM41.181
    • Clearing fee 0.0318% = RM2.9415
    • Stamp duty = RM10
    • Total transaction cost = RM54.1225
  • So, the different for this example before and after GST is around RM2.50 and in terms of percentage, it's just a mere 4.8% more.

    Then, how about capital gains from share investment?

    Many investors sold their holdings before 1st April, thinking that any profit earned from share trading will subject to 6% GST. This is not the case. As usual, any capital gains from share trading in Malaysia are not subject to any tax including GST. Meaning, capital gains will remained as tax-free. No need to panic selling.

    How about share dividend payout?
    For dividend, it will remained the same unless you are using a nominee CDS account, in which there might be some administration fees involved that will be subjecting to 6% GST charge. Better switch to direct CDS account if you want to avoid these charges.


    Conclusion

    Yes, GST definitely will impact the overall share trading market, but the sentiment will be faded away very fast due to its minimal impact. GST aside, it's the emotional impact of the economy that will dampen our share investment. Happy trading !!!

    2 comments:

    1. Thanks for this post. Now things are clearer. It just answered a question that was lingering over my mind at the beginning of this post, how it affects the capital gains from shared investments. Nice presentation. naviplan financial planning training

      ReplyDelete
    2. You covered all the points of this topic. GST is really affecting in Share investment.

      ReplyDelete

    Finance Malaysia Blog appreciates your comment. Cheers!

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