Summary
Summary LA4 - Capital Gains Tax
- Course
- BEL200 (BEL200)
- Institution
- University Of Pretoria (UP)
Includes only relevant information for the learning area. Explained in simple terms for fast and easy learning
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Capital Gains Tax – 8th ScheduleOverview:
Introduced on 1 October 2001. When something capital in nature is sold for more
than its cost price it is a capital gain.
CGT Calculation:
Proceeds less Base Cost equals (P>B) Capital Gain/ (P<B) Capital Loss
Proceeds = SP – recoupment (recoupment = SP or CP {limited to CP} - tax
base/value)
Less
Base Cost = CP – (capital allowances + scrapping allowances)
No scrapping allowance for assets with a useful life of longer than 10 years.
Income Tax Act: Section 26A
There shall be included in the taxable income of a person for a year of assessment
the taxable capital gain of that person for that YOA, as determined in terms of the
Eighth Schedule
NET capital gain (P-B) X Inclusion rate = TAXABLE capital gain
Inclusion rate for natural persons, resident (worldwide) or non-resident (SA source) =
40%
Inclusion rate for companies = 80%
If the disposal of the asset is a donation, considered not measurable in money or
disposed to a connected person not at arm’s length price the Proceeds = Market
Value
If multiple assets are sold and there is a capital loss carried forward from the
previous year (always carried forward every year): COMPANIES:
Asset 1 Asset 2 Asset 3
Proceeds – base cost = Proceeds – base cost = Proceeds – base cost =
capital gain capital gain capital loss
=Total capital gain or loss
Aggregate gain less loss of previous Aggregate loss less loss of previous
year year
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