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Capital Gains Tax: Who does it affect?

by , 11 September 2014
Capital Gains Tax (CGT) is that frustrating SARS invention that takes a portion of any profit you make that's capital in nature.

But there's some confusion about who this tax actually affects. Is it just a business problem? Or does it affect both business and individual taxpayers?

If you don't know the answer to this question, it could land you with SARS penalties and a CGT liability you didn't know you had.

To help you avoid this problem, we're revealing exactly who CGT affects...

 

Here's who Capital Gains Tax affects

 
Capital Gains Tax affects everyone. 
 
That's right! It doesn't matter if you're a business owner or an individual taxpayer, you're still subject to CGT.
 
Here are examples of when a business and an individual taxpayer will pay CGT.
 
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Here's an example of when a business will pay CGT

 
Let's say, you bought a company car, fixed it up and then decided to sell. If you make a profit on the sale of that asset, SARS will take a portion of it as CGT.
 
But you can reduce your CGT liability. If you owned the car for a while and you claimed wear and tear on it, deduct that money from the profit to reduce your CGT liability.
 
Now what about an individual taxpayer?
 

Here's an example of when an individual taxpayer will pay CGT

 
Individual taxpayers will normally pay CGT from property. 
 
Let's say ,you privately own a second residence. You rent this property out and you make a small profit on it each month. You have to pay CGT on that profit. 
 
 
- You make a profit of more than R2 million on it; or
- The whole property is bigger than two hectares.
 
Now that you know, ensure you're always aware of your CGT liability.

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

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