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All you need to know about CGT if you're selling your business property

by , 07 May 2013
If you're selling your business property, you're probably not looking forward to working out your capital gains tax or CGT calculations. Especially if you've looked to Australian news sites for guidance recently, as recent CGT rulings have resulted in it being called 'the capital gains maze'. Luckily, it's a bit simpler in South Africa - just remember to exclude the base cost of the property from your CGT calculations...

Most small business owners in Australia hope the sale of their business will provide a major portion of their retirement nest egg.
But there are complex capital gains tax or CGT rules to consider, says The Australian.
And while you need to pay over CGT to SARS if your business is based in South Africa, you don't have to worry that the capital gains tax rules are complicated.
If you're selling your business property, just remember that you'll only pay tax on a portion of the profit that you make and not on the total earnings you get from the sale, says The Practical Tax Loose Leaf
Selling a property? Remember to exclude the base cost in your CGT calculations!
This means that you can deduct the cost of the property or asset, known as the base cost, from the proceeds of the disposal. 
To exclude the portion of the capital gain relating to the period before 1 October 2001, the base cost of the asset as at that date must be determined.
That's because CGT was only introduced in South Africa with effect from 1 October 2001, and applies to the disposal of an asset on or after that date, says SARS.
Once you've worked out the base cost to exclude, all you need to do is mention all the assets you've disposed of in the current tax period under the 'assets and liabilities' section of your business in your tax return.
Then, if SARS audits your business, you'll have proof of accounting for all your assets correctly.
Selling off your businesses to retire? Don't forget this great CGT concession!
And don't forget that you're entitled to include every one of your small businesses when you determine the CGT amount that needs to be disregarded when you sell your business to retire.
The amount is R1.8 million of any capital gain made when you dispose of an active business asset of your small business in the 2013 tax year, provided that the total market value of all those assets across the businesses doesn't exceed R10 million, says FSP Business.

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