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Follow this vital asset disposal timing rule to avoid Capital Gains Tax issues

by , 12 August 2014
When you dispose of an asset, the date of the disposal plays a role in your Capital Gains Tax (CGT). Depending on how you dispose of certain assets, the timing rules change.

But when it comes to regular disposal, which are the kind you'll deal with most, there is only one rule.

Ensure you know what it is so you don't run into CGT issues...

 

Here's why the timing rule for regular asset disposal is so important

 
Timing rules determine the official date when the disposal took place. This is crucial for Capital Gains Tax purposes and defines the year of assessment you must account the disposal to SARS in.
 
If you get this wrong and don't report the asset disposal on time, you'll face penalties that can range from 10% to 200%.
 
This is why understanding disposal timing rules is so important. 
 
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Here's the general timing rule for regular disposals

 
The general rule says the time of the disposal of your asset, through a change of ownership, is the date the assets changes ownership.
 
In most cases, this is when the asset arrives with the new owner and the risk passes into his hands.
 
This is 'common timing' and is the simplest because the moment the asset changes hands that's the date you mark as the disposal date.
 
This isn't always the case though so check out the Practical Tax Loose Leaf Service where we outline seven other disposal timing rules.
 
Without these rules you may dispose of an asset and account for it to SARS in the wrong year of assessment. So ensure you know what timing disposal rules apply to your asset disposal.

Recommended Product: Capital Gains Tax 101. Your ultimate guide to slashing Capital Gains Tax.
 

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