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Three important facts you need to know about CGT

by , 20 August 2014
Capital Gains Tax (CGT) is a tax you pay on the profits you make on the disposal (sale) of your assets.

Sounds simple enough?

Not quite. There's more to CGT than this simple definition. And it's important that you understand all the implications so you can handle CGT correctly and avoid penalties.

But where do you start? Continuing to read this article to get three important points about CGT you need to know.

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Three facts you need to know about CGT

Fact #1: You can't escape CGT

The onus is on you to declare all your gains and losses, to calculate your due taxes correctly and to pay SARS on time.

If you try to escape CGT, SARS could easily find you guilty of tax evasion and smack you with a 200% penalty!

Fact #2: These seven assets are subject to Capital Gains Tax

  1. The main residence owned by your company, closecorporation or trust, other than a special trust;
  2. Holiday homes or second homes and properties let to tenants;
  3. A boat exceeding 10m;
  4. Caravans;
  5. An aircraft, the empty mass of which exceeds 450kg;
  6. Shares, unit trusts and private investments, and second-hand policies; and
  7. The sale of your business, other than on retirement.
Fact #3: You don't always have to pay CGT 

There are situations where the disposal of an asset doesn't trigger CGT.

For example, there's no disposal for CGT by a company for:

  • The issue or cancellation of a share in the company; and
  • Granting an option to acquire a share or debenture in that company.
Check out this article. It contains all the instances where you don't have to worry about CGT when you dispose an asset.

We've just scratched the surface with these three facts. To find out more facts about CGT, check out the Practical Tax Loose Leaf Service so you'll always get CGT right and 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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