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Three factors that could impact your company's Capital Gain Tax liability

by , 04 September 2014
When your company makes a profit of some kind, SARS wants you to pay tax on it. This tax is Capital Gains Tax (CGT).

But did you know you won't always have to pay CGT on all the money that comes into your company?
There are three factors that could reduce your CGT liability or even remove it completely. And knowing what they are could help you reduce the amount of tax you pay by correctly treating your company's income.

 

Never forget about these three factors that could affect your CGT liability

 
Factor #1: Your intention 
 
If you enter into a transaction because you had to and not because you wanted to make a profit, it could remove your CGT liability. 
 
For example, if your truck breaks down and you sell it for scrap and use the money to replace it, you may not have to pay CGT on any profit you make from the disposal. The reason is your intention was to keep using that truck long term until it broke down. You never intended to make a profit from that asset.
 
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Factor #2: Is the income revenue or capital
These have different tax implications so you must correctly define your profits.
 
Factor #3: When and how you disposed your asset to get that profit
This affects how much and when you pay your CGT.
 
So remember to always consider these three factors whenever you deal with your company's profits so you never pay more or less CGT than you should.

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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