February 9, 2021

Capital gains tax – When does it come into play?

The distinction between amounts received of a capital nature as opposed to a revenue (or income) nature is essential for income tax purposes. Non-capital amounts received, such as from the disposal of trading stock, are subject to tax at a higher effective rate compared to capital profits. The primary intention with which an asset is acquired is generally conclusive as to the nature of the receipt arising from the realisation of a capital asset unless other factors intervene which show that it was sold in pursuance of a profit-making scheme. It is not uncommon though, that a person’s intention in […]
October 15, 2020

Shareholding in SA companies: Beware of residency changes

In 2001, South Africa, like many other countries, introduced capital gains tax aimed at levying capital gains tax on the gain made from the disposal of certain assets. When a South African tax resident company redomiciles abroad and changes its tax residency to another tax jurisdiction, such a company ceases to be a tax resident for South African income tax purposes (regardless of whether the assets of such a company are still located in South Africa or whether the company still continues to do business in South Africa or not). Generally, the cessation of South African tax residency is deemed to be a disposal for capital gains tax purposes and triggers capital […]
April 20, 2020

When is Capital Gains Tax not incurred?

Section 9HA of the Income Tax Act deals with deemed disposals by a deceased person. This section of the Act often causes some confusion, especially where there are heirs or legatees other than the surviving spouse. In terms of the provision, a deceased person is treated as having disposed of his or her assets at the date of death, for an amount received or accrued equal to the market value of those assets as at the date of death.This deeming provision does not apply to the following circumstances: Assets of, or for the benefit of the deceased’s surviving spouse. An […]
July 30, 2015

The link between CGT and Income Tax

The name “Capital Gains Tax” (CGT) can create the impression that CGT stands on its own as a seperate tax from the rest of the taxes but this is not the case. CGT forms part of the Income Tax system and capital gains and capital losses must be declared in the annual Income Tax return of a taxpayer. If a taxpayer is not registered for Income Tax If a natural person is not registered for Income Tax and his/her taxable income consists only of a taxable capital gain or a deductible capital loss, the amount of which is more than […]
March 9, 2015

Capital gains tax and the sale of a property

Capital Gains Tax was introduced on 1 October 2001. Capital Gains Tax is payable on the profit a seller makes when disposing of his property. What is meant by Capital Gain? A person’s capital gain on an asset disposed of is the amount by which the proceeds exceed the base cost of that asset. What is base cost? The base cost of an asset is what you paid for it, plus the expenditure. The following can be included in calculating the base cost: The costs of acquiring the property, including the purchase price, transfer costs, transfer duty and professional fees […]