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Capital Gains Tax: The good, the bad and the ugly

by , 05 September 2014
Capital Gains Tax (CGT) is something everyone hates because it affects individuals and companies. But how much do you really know about this tax?

You know you pay it when you make profit on an asset that you sell or dispose of, but what else do you know?

Today, we're going to tell you the good, the bad, and the ugly about CGT so you can reduce your tax burden and stay out of trouble with SARS...


Here's the good about Capital Gains Tax

You may not know this, but the CGT rate is less than income tax, says the Practical Tax Loose Leaf Services. This means if you can classify a profit as a capital gain, you could actually save a bit of money.
You can also reduce your CGT liability by deducting income amounts from the profit you made.
But with every good thing there's also a bad side.

Here's the bad of Capital Gain Tax

Any improvements you make to your office, machinery or other assets will cost you more in CGT. This is because they'll push up the overall value and, therefore, the profit you'll make at the end of the day.
So when it comes to fixing up your office, remember you can claim repairs as a tax deduction but if you cross the line into improvements you'll pay CGT.
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There are a few CGT loopholes that can save you thousands of rands every single year and, in some cases, let you off the CGT hook completely…

Here's the ugly part of Capital Gains Tax

You generally only have a certain period to pay your CGT. If you don't pay it within that time frame, SARS will charge you penalties.
This can become a problem if you're not aware of your CGT liability. You need to check what you owe SARS every so often to ensure you haven't clocked up some CGT you didn't know about.
There you have it, the good, the bad and the ugly of CGT.

Recommended Product: Capital Gains Tax 101. Your ultimate guide to slashing Capital Gains Tax.

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