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Do you know how the value of your assets affects your Capital Gains Tax?

by , 11 August 2014
When you dispose of a capital asset in your company, SARS wants its slice of the proceeds. This is the dreaded Capital Gains Tax (CGT) and it's every business owner's biggest headache.

But something you must remember with CGT is the value of the asset determines the capital gains you can get from it. This in terms affects the amount of CGT you have to pay.

Because of this, you must revalue your assets regularly. Here's what you need to know about revaluing your capital assets and CGT...


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Here's what you need to know about the value of your asset and Capital Gains Tax

 
There's a rule with Capital Gains Tax that you must revalue your asset within three years of its original valuation. 
 
This means if you bought the asset at market value in 2009, you must revalue the asset within three years of the original valuation. So if you got the asset on the 3rd of September 2009, you have until 2nd of September 2012 to revalue the asset.
 
Now normally you only have to submit your valuation of the asset to SARS when you sell it. This way SARS knows the proceeds you got for the assets are correct in relation to its value. But there are situations when you must submit the asset's valuation with your tax return in that first year.
 

Here's when you must submit the asset's valuation to SARS with the first year's tax return

 
You must submit the asset's valuation to SARS with the first tax return if:
 
- The market value of the asset is more than R10 million;
- The asset's an unlisted share and the value of all the shares is more than R10 million; or
- The asset is an intangible such as goodwill and its market value is more than R1 million.
 
So now you know. The value of your asset is very important when it comes to Capital Gains Tax, ensure you regularly valuate your capital assets so you don't get it wrong.
 
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