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This one thing will help you work out your Capital Gains Tax liability correctly

by , 26 September 2014
Do you think Capital Gains Tax (CGT) affects the entire amount you got for an asset? Well, this isn't true.

CGT only affects the proceeds you made on the disposal of the asset. This means any money you make over and above the base cost of the asset.

But even then, CGT doesn't cover every cent of your proceeds.

Knowing how to work out the percentage of your proceeds you must pay tax on is the one thing that'll help you work out your CGT liability correctly...

 

This is the one thing you need to know to correctly work out your CGT liability

 
To correctly workout your CGT liability you need to know the SARS inclusion rate for the present year. This is the percentage of your proceeds SARS wants you to pay tax on.
 
Here are the inclusion rates for all the people CGT covers:
 
 
Now you need to know how to use this inclusion rate.
 
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Here's how to use the inclusion rate to correctly work out your CGT liability

 
When you dispose of an asset, first deduct its base cost to determine your proceeds. Then deduct any tax deductions (such as wear and tear) you claimed on the asset while you owned it.
 
Then you can apply the inclusion rate to the remaining proceeds. This will give you the correct amount of money you need to pay tax on.

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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