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Six facts to help you understand CGT better

by , 30 May 2014
The simple definition of Capital Gains Tax (CGT) is that it's tax you pay on the profits you make on the disposal (sale) of your assets.

While this definition may be simple, in reality CGT is complex. The high number of companies that get it wrong and incur penalties and additional interest is proof of this.

The good news is your company doesn't have to become another statistic.

That's right. Today we'll give you six important facts about CGT so you can avoid penalties.

We'll tell you everything you need to know, including instances where you won't trigger CGT when you sell an asset and we'll finally set the record straight on CGT and distributing an 'asset in kind'.

Six CGT facts no business owner can afford to be without

Fact #1: CGT applies to individuals, trusts and companies.

Fact #2: There are CGT consequences when it comes to a deceased estate.

Fact #3: Distributing an 'asset in kind' triggers CGT.

Fact #4: You'll only avoid paying CGT on stolen, lost or destroyed assets if you meet these four requirements.

Fact #5: CGT comes into play when you sign a lease for the rental of your business premises.

Fact#6: You won't trigger CGT if you dispose of an asset in one of these ways…

Warning! SARS is very strict when it comes to CGT. It wants a chunk of money when you sell an asset and it'll punish you harshly if you fail to account for CGT correctly.

Taking these facts into account will go a long way in ensuring you avoid these harsh penalties.

If you get lost in the CGT maze, be sure to check out the Practical Tax Loose Leaf Service. It covers everything about CGT. You can also get more answers regarding CGT at www.accountingandtaxclub.co.za.

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