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To prove you've paid your Capital Gains Tax in South Africa keep an asset register

by , 11 March 2013
Poor Julius Malema. He is now in trouble because of his Capital Gains Tax in South Africa at SARS. because of his It looks like stress over his tax liabilities caused him to get rid of his capital assets before they were due to be auctioned off. Now he's in more trouble than ever before, and faces charges of tax avoidance. The easiest way to avoid a similar fate is to keep an asset register, so you can prove to SARS that you've paid your capital gains tax correctly every time your business disposes of a capital asset. Here's how to do it...

Expelled ANC Youth League president Julius Malema's year has been off to a rough start.
 
First he was found to owe SARS in excess of R16 million, with capital assets at his homes attached to the tax bill.
 
Now, Malema's been accused of lying to SARS about his assets and removing them, says IOL.
 
As a result, he could walk away with nothing.
 
Worse, he'll be charged with tax avoidance for intentionally cheating the tax system, says the Tax Bulletin.
 
Mention all capital assets in your tax return or you'll be accused of tax avoidance!
 
You'll face a similar fate if you have 'hidden assets' that you haven't included as 'assets and liabilities' in your tax return, especially as SARS is stepping up the intensity of its tax audits, adds FSP Business.
 
One way to make sure SARS doesn't accuse you of tax avoidance is to ensure you've paid your capital gains tax when you do dispose of assets, the Tax Bulletin reports.
 
Most capital assets are subject to capital gains tax – even shares, unit trusts, private investments and second-hand policies, or Krugerrands or other silver, platinum, or gold-minted coins, or any other coin that's market value is mainly in the metal it is made of. 
 
And as the date of the disposal of assets can't be pre-determined or manipulated, you'll have to make sure you declare your asset disposal to ensure you aren't accused of tax avoidance for capital gains tax purposes,warns FSPBusiness.
 
If you don't, SARS will find out if and when it does a tax audit of your business and you'll face penalties of up to 200%.
 
Keep an asset register to prove your capital gains tax compliance
 
The easiest way to prove you've declared all assets you've disposed of and that you've paid the relevant capital gains tax over to SARS correctly is to keep an asset register.
 
It may seem obvious, but Entrepreneurmag says 'The truth is that many businesses don't have a list of all the things they own.'
 
Here's what you'll need to mention in your asset register
 
Entrepreneurmag says your asset register must be very detailed. It should include a name that clearly identifies each asset, as well as the location, age and assessments of value and condition.
 
To keep up-to-date, it's a good idea to update your asset register at least once a year, or any time your business makes a single major purchase.
 
Simple as that.
 
It's the easiest way to ensure you declare all your business capital gains and losses and pay SARS on time to avoid landing in the same boat as Malema.

In the Practical Tax Loose Leaf we've got a dedicated chapter on Capital Gains Tax, in this chapter you'll discover...
  • 5 key concepts to understand, before you can get
  • started calculating your CGT
  • How to calculate your CGT liability, in 5 easy steps
  • How will CGT affect small businesses?
  • How does CGT affect provisional taxpayers?
  • What's included in CGT if you work from home?
  • Follow these 8 disposal timing rules
  • Transfer your residence from a trust or company without
  • paying capital gains tax or Transfer Duty – here's how
Get your copy of the Practical Tax Loose Leaf  today!

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