In Britain, taxpayers and landlords suspected of underpaying capital gains tax
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
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
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!