Capital Gains Tax
What are the 4 requirements that need to be met before there will be any CGT
- Assets - Disposal - Proceeds - Base Cost
The definition of an asset in the income tax act excludes 2 things
- Currency - Cash
When will a disposal of assets deem to be at MV?
- Donation - Disposal to a connected person not in an arms length transaction - Deemed Disposals
Name the scenarios in which there will be a deemed disposal?
- Emigration ( exiting the country ) - Immigration ( coming into the country ) - Change of Intention Capital Asset --> Trading Stock Deemed disposal at MV S22(2) - o/b of trading stock Trading Stock --> Capital Assets S22(8) non- trade disposal at MV Personal Use Asset --> Trading Stock No CGT Effects on personal use assets Trading Stock --> Personal Use Deemed disposal at MV
CGT Exclusions
- Primary Residence for Natural Persons (2 000 000) - Donations to a PBO - Personal Use Assets ( an asset used for purposes other than trade) Except for: Immovable Property Aircrafts > 450kg Boats > 10m Gold and Platinum Coins
Valuation Date
1 October 2001
Annual Capital Gains Exclusion for a Natural Person
30 000
Inclusion Rate for a Natural Person
33.3%
Inclusion Rate for a Juristic Person
66.6%
If a capital asset is acquired before the valuation, what are the 3 measures that can be used at the valuation date to determine the base cost?
Higher of: MV TABC 20% x Net Proceeds (Proceeds - Post Acquisition Expenditure)
Base Cost
Original Cost - Allowances
Proceeds
Selling Price - Recoupments
Non-Resident CGT Effects
Taxed on source income therefore will be taxed on disposals of assets that are fixed/immovable within SA and disposal of assets of a permanent nature.
Resident CGT Effects
Taxed on worldwide income therefore will be taxed on disposal go worldwide assets.