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Four requirements you must meet to avoid paying CGT on stolen, lost or destroyed assets

by , 09 April 2014
Think nothing escapes the Capital Gains (CGT) net? Stolen, lost or destroyed assets do. This means you don't have to pay CGT. But, there's a small catch. Continue reading to find out how CGT works when it comes to stolen, lost or destroyed assets so you can save your company money.

You don't always have to pay CGT on assets you get rid of

The Practical Tax Loose Leaf says that, in most cases, you have to pay CGT when you sell an asset. But there are some situations where it's not fair for you to pay Capital Gains Tax on the disposal of your asset if you're not getting instant financial gain.

This is the case with stolen, lost or destroyed assets.

The CGT consequences are rolled-over and the asset is transferred on a tax-free basis. Roll-over is a method for deferring a capital gain or loss.

As you know, there's always a catch when SARS is involved…

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Are your capital gains costing you too much tax?

Get your copy of Capital Gains Tax 101: Your ultimate guide to slashing Capital Gains Tax today so you don't pay a cent more to SARS than you have to.

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You don't have to pay CGT on stolen, lost or destroyed assets you've insured or compensated for, if you meet the following four requirements:

  1. The amount you receive mustn't be less than the base cost of the asset;
  2. You must spend the full amount you receive on a replacement asset;
  3. You must buy the replacement asset within 12 months from when the original asset was lost, stolen or destroyed (and not from the date you receive your compensation); and
  4. You must bring the replacement asset into use within three years of the disposal of your stolen, lost destroyed asset.

The bottom line: You don't have to pay CGT when it comes to stolen, lost or destroyed assets. But the only catch is that you have to meet the above requirements.



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