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.