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Do this today and never fail a CGT-based tax audit again!

by , 14 March 2013
Capital gains tax is in the news again. Britain's customs officials are concerned that the latest figures show the number of people trying to avoid it has leapt up 43% over the last year! Locally, SARS has similar fears. And that's why it's clamping down on tax avoidance by increasing its tax audits. Lucky for you, there's a simple way to remember to pay capital gains tax to SARS each time you dispose of an asset...

In Britain, taxpayers and landlords suspected of underpaying capital gains tax or CGT have added an extra £105.2 million to the taxman's coffers. 
'Clamping down on CGT avoidance has been fruitful … in the past, so it is not a surprise that they are refocusing their efforts on this sort of tax avoidance again this year,' said Roy Maugham, head of tax at UHY Hacker Young on FreelanceUK.
And SARS plans to conduct more than 72,926 audits this year, which means it's that much more likely your business will face a tax audit and have its capital gains tax claims investigated… so best you get them right, says FSP Business!
Taxpayers think it's complicated as you're obliged to pay CGT on your capital assets, but there are constant changes to this area of tax. 
But it's easy – you can even legally reduce the CGT your business pays over to SARS! 
CGT is usually calculated on the amount by which the proceeds from the sale exceed the base cost of the asset, says FSP Business.
Now, a change to the Taxation Laws Amendment Bill means you'll effectively pay over less capital gains tax when you cancel or reduce a debt, says the Business Day's BD Live website.
FSP Business says you can do so by reducing the base cost of an asset on which capital gains will be levied in future.
So if you fund a capital asset with debt of R100, and the debt was reduced by R80, the base cost of the asset would be reduced to R20.
An easy way to remember to pay capital gains tax to SARS when you dispose of an asset...
SARS won't remind you about this as it can't keep track of your assets – have a look at your asset register. You'll have things ranging from property of any kind to assets that are movable or immovable, tangible or intangible, says SARS.
So if SARS does come for a tax audit of your premises as it suspects you haven't been paying over capital gains tax correctly, make sure you can produce an up-to-date asset register that states each asset, as well as the location, age and assessments of value and condition of each asset, says FSP Business.
Just remember to update your asset register each time you buy or sell any assets in your business – this will remind you to pay over the CGT to SARS.
As the date of the disposal of assets can't be pre-determined or manipulated, all you have to do is make sure you declare your asset disposal to SARS and keep proof of it in your asset register.
It's the easiest way to pass your tax audit with flying colours!

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