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You will avoid CGT if you dispose any of your assets in these seven ways

by , 07 December 2016
You will avoid CGT if you dispose any of your assets in these seven waysYou probably know that certain events are regarded as disposals for CGT purposes.

But did you know that if you dispose of an asset in these seven ways, then there's no disposal of CGT involved?

Read on to find out more...

Three instances where you don't have to pay Capital Gains Tax... And eight other ways to LEGALLY beat the taxman!

Giving a huge percentage of your profits to SARS can feel like stabbing yourself in the eye…

Just when you're about to bank your hard-earned money, SARS swoops in and takes a huge chunk in capital gains tax (CGT). Money that could be used to pay off debts, improve company processes and reward hard-working employees.

And, what's worse, from the 1 March that chunk got even bigger!

You see, SARS decided to increase the capital gains inclusive rate from 66.6% to 80% for companies and this can massively affect your revenue!

But here's some good news for every bewildered CGT taxpayer…


Seven events that will trigger Capital Gains Tax

Every time your business sells, donates or scraps an asset and it makes a profit, SARS takes a big bite out of the proceeds. And it calls this bite Capital Gains Tax (CGT).

The Practical Tax Handbook explains that a disposal is an event that triggers CGT.

It includes any:
  • Sale, donation, expropriation, conversion, grant, cession, exchange, any other alienation or transfer of ownership of an asset;
  • Forfeiture, termination, redemption, cancellation, surrender, discharge, relinquishment, release, waiver, renunciation, expiry or abandonment of an asset;
  • Scrapping, loss or destruction of an asset;
  • Vesting an interest in a trust's asset, which is further vested in a beneficiary;
  • Distribution of an asset by a company to a shareholder
  • Granting, renewing, extending or exercising an option;
  • Decrease in value of a person's interest in a company, trust or partnership because of a value shifting arrangement.
The good news is there are certain instances where your disposal won't attract CGT. Let's see what they are...

CGT loopholes exposed!

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 hook completely…

For example, did you know:
  • There are three situations where you don't have to pay CGT?
  • Or that you could save up to R1.8 million on your CGT bill if you're about to retire (if you know how)?
  • Or that re-organising your business could drastically minimise your CGT bill?
These are just three of the many ways you can save on CGT without getting in trouble with SARS.

Click here to get your hands on these secrets...

If you dispose of an asset in these seven ways, there's no disposal for CGT...
 
According to the Practical Tax Handbook, there's no disposal of an asset:

#1: Where you transfer an asset as security for a debt or you transfer that asset back when a security is released.

#2: There's no disposal for CGT by a company for:
  • The issue or cancellation of a share in the company;
  • Granting an option to acquire a share or debenture in that company.
#3: There's no disposal for CGT by a unit trust scheme for the issue of a participatory interest in that scheme.

When an investor buys into a unit trust scheme, the scheme is effectively selling him a 'participatory' interest in the scheme.

In this case, the sale by the unit trust is NOT seen as a disposal for CGT purposes.

#4: Granting an option to acquire a participatory interest in that scheme will also not attract CGT. This is because the investor pays CGT on the disposal of the units.

#5: There's no disposal for CGT by a person for:
  • Issuing any bond, debenture, note
  • Borrowing money.
  • To get credit from another person.
#6: There's no disposal for CGT by a trustee for the distribution of the trust's asset to a beneficiary so that he has a vested interest in that asset

#7: You won't attract CGT where you acquire the right to obtain shares in terms of a share incentive scheme under Section 8C of the Income Tax Act.

You'll only escape CGT in the above mentioned scenarios. Under normal circumstances you must declare all your gains and losses, calculate your due taxes correctly and to pay SARS on time.



Are your capital gains costing you too much tax? Click here so you don't pay a cent more to SARS than you have to.


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