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When disposing of regular company assets, use these four golden rules

by , 12 August 2014
When you dispose of an asset, you get profit from it. SARS wants some that profit in the form of Capital Gains Tax (CGT). Now there are many factors you need to consider when it comes to the disposal of an asset and the CGT you'll need to pay.

One of these things is when you disposed of your asset because the date of disposal affects when you need to pay your CGT.

And that's where these four rules come in...

 

Here are four rules you must always remember when disposing of regular company assets

 
Rule #1: If you dispose of an asset to a trust beneficiary, the disposal date is the date of vesting
 
Rule #2: If you dispose of an asset to a shareholder, the disposal date is the date in the specie distribution
 
This is when you dispose of an asset to a shareholder in kind and not for cash.
 
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Rule #3: If SARS deems your actions as a disposal, it has a specific disposal date
 
If you do something that SARS sees as a disposal for Capital Gains Tax purposes, the disposal date is the day before the event happened.
 
Rule #4: If you dispose of or discharge debt, the disposal date is the same day this event occurs
 
Remember, the timing and circumstances around the disposal of an asset can affect your CGT burden. You need to ensure you record the timing correctly. If you don't, you may not be able to submit it with the correct tax return and that'll mean penalties.
 
The Practical Tax Loose Leaf Service has four more asset disposal timing rules. Take a look at these to ensure you never get confused about the disposal date again. 

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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