To get Capital Gains Tax right in South Africa there're five things you need to understand to avoid SARS smacking you with a 200% CGT tax evasion penalty!
In last year's Budget Speech, SARS raised its Capital Gains Tax in South Africa (CGT). This means, every time your business sells, donates or scraps an asset and it makes a profit, SARS will now take an even bigger bite out of the proceeds. Here's what you need to do to ensure you're working out your company's Capital Gains Tax payments correctly...There's no escaping Capital Gains Tax! If you try, SARS could easily find you guilty of tax evasion and slap you a with 200% penalty.
It's up to you to declare all your gains and losses, to calculate your due taxes correctly and to pay SARS on time. But before you can do that, you need to understand five key concepts to calculating your business's Capital Gains Tax in South Africa.
Make sure you look at these five things when calculating your company's CGT
Assets: This is any property or interest in that property (such as houses, cars, machinery, etc.).
Disposals: These are the types of actions that trigger CGT. Disposals include (among other things) sales, donations, scrapping, distributing of your company's assets.
Proceeds: In terms of SARS's outlines, proceeds refer to any amount that you accrue or receive as a result of the disposal of an asset. For example, the profit you make if you sell a painting.
Base cost: When calculating your company's CGT, it's important to know how much you spent acquiring the asset in question. This is known as the 'base cost'. It's also important to include any costs you incurred improving the assets, provided those improvements still exist when you sell the asset. If, for example, the asset in question is a house, the base cost will include the cost to the property, as well as transfer and attorney fees.
Valuation date: CGT came into being on the 1st of October 2001. This is known as the valuation date.
For a detailed explanation on what these five basic CGT
concepts include and how they're used to calculate your company's CGT
liability, get your hands on our FSP Business Capital Gains Tax 101: Your ultimate guide to slashing Capital Gains Tax here
If you'd like to read more about how to avoid nasty tax penalty's from SARS also read:
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