Avoid the CGT Tax Trap in Just 30 Minutes!

Avoid the CGT tax trap in just 30 minutes!

What is capital gains tax and how does it affect you? We tell you all the information you need to know to avoid the traps...

The “CGT monster” was set loose on taxpayers on 1 October 2001, introducing a complex burden on taxpayers.

CGT is the tax you pay when you dispose of an asset. It is calculated on the amount by which the proceeds from the sale exceed the base cost of the asset.

We will explain the specific inclusion rates that apply to individuals and companies as well as how to work out your base cost. If you get this wrong, you will pay more than you need to as the base cost also includes improvements you may have made to the asset, as well as many other costs related to the asset. Our full list of the main costs that form part of the base cost is published in the Practical Tax Loose Leaf Service, as well as the full list of assets that are EXCLUDED from CGT.

We also include a feature on the special dispensation allowed to small business owners when it comes to CGT. This can be quite substantial in a lot of cases and we will take you through the various requirements you need to meet to qualify.

How will capital gains tax affect small businesses?

If you’re an owner of a small business, you have been given a special dispensation when you sell your businesses to retire (Paragraph 57 of the Eighth Schedule). The purpose is to provide relief to small business owners who have invested their resources in their businesses to build up retirement capital. It does not matter whether the small business is held directly or whether it is a company, close corporation or partnership. The capital gain or loss on the business is disregarded under the following conditions:

  • The market value of the assets of the business does not exceed R5 million
  • You hold at least 10 % of the share capital
  • You have been substantially involved in the operations of the business
  • You have held ownership or shares for a continuous period of at least five years
  • You have attained the age of at least 55 years or the disposal is in consequence of ill health, other infirmity, superannuation (retire from service on a pension) or death
  • Your estate receives the benefit in the event of your death
  • Your total exemption under this dispensation is limited and may not exceed R500 000 in your lifetime. The dispensation is cumulative and not for each business or asset you dispose of

TIP

Don’t attempt to claim more than the R500 000 to which you are entitled. SARS maintains records of exemptions already allowed and may judge apparent transgressions harshly.

  • All capital gains from the sale of your businesses must be realised within two years from the date of the first disposal

Remember: when selling more than one business, ensure the total market value doesn’t exceed R5 million, otherwise it won’t be disregarded.

Try our complete Tax Advisory Service risk-free for 14-days. As part of this service you’ll receive the Practical Tax Loose Leaf Service, three Bonus Reports, Regular updates, the Weekly Tax Bulletin, Online access to past Tax Updates and a Tax Helpdesk.


What you’ll discover in the Practical Tax Loose Leaf. Order today!

  • CGT: All the assets which are excluded from capital gains tax
  • The relationship between marriage and CGT
  • Property valuations
  • Corporate and Personal Tax: How to balance corporate and personal tax burdens in the most tax efficient way
  • The real difference between capital and revenue
  • Directors’ tax and PAYE: All the best tax savings tips
  • The best tax avoidance methods for estate planning
  • Information on tax tables, banking, exchange controls, insurance, invoicing, immovable property, taxation of foreign operations and much more…