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Never forget this important factor when working out your Capital Gains Tax

by , 02 October 2014
Capital Gains Tax (CGT) is the tax you pay whenever you make a capital gain. This normally happens when you dispose of an asset and make a profit in the process.

Most business owners hate working out their CGT because they struggle to remember how much SARS wants them to pay tax on and what affects that amount.

That's why we're revealing this important factor you must never forget when you work out your CGT...

 

This important factor plays a big role in your CGT

 
You must pay CGT on the profit you make when you dispose of an asset. Therefore, the factor that affects this the most is the base cost/value of the asset.
 
After all, a profit is only a profit if it covers more than what the asset's worth. 
 
Let's say, for example, you sell your office printer and get R12 000 for it because it's still in great condition. 
 
The printer's current value is R9 500 so you make a profit of R2 500. This is your capital gain and the amount you must pay CGT on.
 
So how do you find out what your asset's base cost/value is?
 
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Here's what to do to find out the base cost/value of your asset

 
To find out your asset's base cost/value, you must get a valuation certificate. You can get this from a registered valuation company. They'll send a licensed valuer to assess your asset and determine its base cost/value.
 
He'll then issue you with a valuation certificate, which you must keep so you can prove you correctly work out your CGT liability with the correct value. 
 
This helps substantiate your tax return and avoid any SARS penalties.
 
Never forget to check the base cost/value of your asset when you dispose of it to work out your Capital Gains Tax liability correctly.

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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