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Here's how to accurately value your assets so you never pay too much CGT

by , 15 September 2014
When you sell or dispose of an asset, you need to know how to treat the profits. The reason for this is SARS expects you to pay Capital Gains Tax (CGT) on them.

So what do I mean by 'treat the profit'? Simply calculating what profit you made on the disposal and then how to work out your CGT liability.

But here's the thing... You can't work out your profit if you don't know what the market value of your asset is. That's why an asset valuation is so important.

Here's how to do it...

 

Here's how to value your assets correctly 

 
Value and price generally mean different things and different prices, depending on whether you're buying or selling. 
 
This can get complicated so ask a professional valuer to do the valuation for you. He'll ask if you're a buyer or seller to determine the type of valuation you need.
 
For CGT purposes, you need to get a valuation of the property. In other words you must determine the market value of the asset.
 
To limit the capital gain when you dispose of the property, you want the value of the property to be as high as possible. 
 
But you need to remember this important point about valuing an asset.
 
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Remember this important point when valuing an asset

 
Remember the onus is on you to substantiate the valuation if SARS challenges it. You may face penalties if you can't make a reasonable case and SARS decides to adjust the valuation. 
 
The fact that you did a valuation through a qualified valuer won't stop SARS from auditing it. Where SARS isn't satisfied with any valuation, it'll request further information or documents so it can to adjust the valuation. You do have a right to object or appeal against any such decision though.
 
When you need to do a valuation, it's best to go to someone who knows what they're doing. This will help you avoid penalties.


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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