Disposing an asset incorrectly is a sure way to trigger a SARS audit.
The consequences of this simple error are severe.
'SARS could easily find you guilty of tax evasion and smack you with a 200% penalty,' warns the Practical Tax Loose Leaf Service.
Is that a risk you're prepared to take?
Follow these five disposal timing rules to avoid errors when making disposals
#1: Use the general timing rule for regular disposals
The Practical Tax Loose Leaf Service explains that the timing rules will determine the date when the disposal occurs for CGT purposes and will define the year of assessment during which the disposal must be accounted for to SARS.
As a general rule, the time of disposal of an asset, through a change of ownership, is the date of change of ownership. In most cases, this is when the asset is delivered and the risk passes to the recipient.
#2: If you dispose of an asset to trust beneficiaries, the disposal date is the date of vesting
A trust should dispose an asset to a beneficiary when the interest in those assets vests in the beneficiary.
#3: The disposal of an asset to a shareholder is the date of the in specie distribution
The distribution of an asset by a company to a shareholder happens when asset is distributed in specie (i.e. the distribution of an asset in kind, not in cash).
#4: The disposal debt in a debt reduction is on the date the debt's reduced
Where a debt is reduced or discharged, disposal occurs when the event occurs.
#5: Special timing rules apply in special circumstances
Certain timing rules apply to special circumstances. For example, with the time of disposal, in the case of:
Remember, SARS could slap you with a 200% penalty if your dispose your assets at the wrong time. So follow the above mentioned rules to avoid this.