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Business owners: Capital gains tax doesn't just apply to property!

by , 08 March 2013
Businesses face so many taxes, it's little wonder they try to lessen the load where possible. But one area you simply can't avoid is capital gains tax. If you've sold a property recently, you'll have to make sure you pay your capital gains tax over to SARS correctly to avoid huge fines. But it' not just property that CGT applies to...

 
Chinese homeowners are scrambling to shift property before 20% capital gains tax hits, says the DailyMail
 
South African businesses are also worried, as not paying capital gains tax when you dispose of company assets is one of the easiest ways to unintentionally commit tax avoidance.
 
That's because it's up to you to declare all your capital gains and losses and pay SARS on time. 
 
Don't make the most common mistake that applies to capital gains tax!
 
Most businesses think capital gains tax only applies to the sale or disposal of their property or business.
 
But it's not just businesses and properties that CGT applies to. 
 
Here are a few 'not-so-obvious' situations where capital gains tax applies
 
The sale of assets like cars and machinery are also seen as capital gains, as is the sale, donation, scrapping, or distributing of your company's assets, like donating an old printer to the local old age home.  And if you make a profit when disposing of the asset – like receiving R10 in lieu of the printer – capital gains tax applies too.
 
So give your business premises a good hard look and write down all the assets that capital gains tax applies to.
 
This way, you'll be more likely to remember to declare all your capital gains to SARS when you sell or dispose of them.
 
If you don't, you'll be found guilty of tax evasion and slap you with a 200% penalty, says FSP Business.
 
If all else fails, move your business to Mauritius – it's one of the few countries that hasn't implemented capital gains tax yet!
 

For a detailed explanation on what these five basic CGT concepts include and how they're used to calculate your company's CGT liability, get your hands on our FSP Business Practical Tax Loose Leaf  here.

In the Practical Tax Loose Leaf we've got a dedicated chapter on Capital Gains Tax, in this chapter you'll discover...
  • 5 key concepts to understand, before you can get
  • started calculating your CGT
  • How to calculate your CGT liability, in 5 easy steps
  • How will CGT affect small businesses?
  • How does CGT affect provisional taxpayers?
  • What's included in CGT if you work from home?
  • Follow these 8 disposal timing rules
  • Transfer your residence from a trust or company without
  • paying capital gains tax or Transfer Duty – here's how
Get your copy of the Practical Tax Loose Leaf  today!

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