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Do you know who to ask to perform a valuation of your assets for tax purposes?

by , 15 September 2014
It's important to do a valuation on your assets. 'Why?' you ask.

Simply because when you dispose of an asset you need to pay Capital Gains Tax (CGT) on the profit you make from that asset. To correctly determine your profit, you need to know what the asset's market value is.

That's where a valuation comes in. It gives you an accurate value on your assets based on the asset's age, use and the value of similar assets in the market.

But who should do this valuation. Let me tell you...

 

Do you know who can perform valuations?

 
The Income Tax Act (ITA) doesn't specify who can perform valuations. Any person or body can do a valuation for you. The choice is entirely yours to decide who you want to use the exception of
Usufructs, financial instruments, shares, units in unit trusts, etc.
 
This could vary from you (the owner) to a registered professional valuer ('sworn valuer'), an accountant, an estate agent, or a lawyer. 
 
Although the ITA doesn't specify the person and method of valuation, a valuation done by an independent expert, with a properly motivated report, is more acceptable to SARS than a valuation done by anybody else. It's important to note that the onus of proving any valuation will always lie on you, the taxpayer.
 
So what does all this actually mean?
 
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Here's what this ITA rule means

 
This means SARS will accept a valuation from anyone, but it would prefer it if it came from a sworn valuer. The reason for this is, this person will have more experience and knowledge and have no reason to falsify the valuation. 
 
This will give you more protection against SARS penalties and audits so rather go for a professional valuer. 

PS. Here are three instances where you don't have to pay Capital Gains Tax... And eight other ways to LEGALLY beat the taxman!

 

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