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Thinking of disposing of an asset? Do this before you do to reduce your Capital Gains Tax

by , 11 September 2014
You must pay Capital Gains Tax (CGT) if you make a profit on the disposal of an asset. What this means is if you sell and asset and make a profit, or you swap that asset for something with a higher value, you must pay tax on that money.

But don't despair! You can reduce your CGT liability with a few easy, and legal, actions.

Here's what you should do before you calculate your CGT so you can reduce it...

 

Do this to reduce your CGT liability

 
Let's say, you want to sell your company car. It's worth R64 000, but when you sell it, you get R70 000 for it. That's a profit of R6 000 that you must pay Capital Gains Tax on. 
 
But you can reduce that a bit so you don't have to pay as much CGT
 
Here's how...
 
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Here's how to reduce the CGT on the profit from that company car
 
Let's say you had the car for two years. In that time, you claimed a wear and tear allowance on it twice. You can take the amount you got from this wear and tear and deduct it from your profits. 
 
Otherwise, it's as if SARS gave you the wear and tear allowance and then asked for the money back. By removing that amount from your profits, you can reduce the amount you'll pay Capital Gains Tax on. 
 
You can do this for other amounts such as a repair deduction as well. 
 
By doing this before you work out your CGT liability, you can substantially reduce it and that's good news for your bottom line. 


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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