Three ways you can legally cut down on Capital Gains Tax by reducing the proceeds of your disposed asset
No one wants to give SARS a piece of their profits. Sadly though it's the law and with Capital Gains Tax (CGT) it's impossible to avoid giving SARS some of your hard earned cash.
That's why business owners everywhere all look for ways to reduce their CGT.
The best way to do this is to reduce the taxable proceeds from the disposal of a capital asset.
And there are three ways you can do this...
Reduce the taxable profits from an asset disposal in these three ways
You need to be smart and careful about how you reduce Capital Gains Tax. SARS watches all of your transactions very careful to ensure you don't cheat it. If you do and it catches you, there will be penalties coming your way.
That's why reducing the taxable profit from an asset disposal is the easiest way to legally avoid paying too much CGT
. You can do this by:
1. If you sell an asset and part of the proceeds go to your gross income, you must deduct that amount from the proceeds. For example, if you claim wear and tear on the asset, that money is part of your gross income. Therefore, you must deduct the wear and tear amount from the proceeds. Otherwise you'll pay double tax on the same amount.
2. You can deduct the amount from the proceeds that you have to repay or will have to repay to the person who bought the assets.
If your buyer cancels your agreement, you won't pay any CGT
because you didn't make any proceeds.
There you have it: Three small ways to reduce your CGT
PS: There are more ways to LEGALLY beat the taxman
There are a few CGT
loopholes that can save you thousands of rands every single year and, in some cases, let you off the CGT