Learning unit 7.pdf - Study unit 2 unit 7 Learning...

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2016/09/19 1 Study unit 2: Administration, returns and assessments Learning unit 7: Capital gains tax Introduction 2 Introduced on 1 October 2001 what is the effect of this? Eighth Schedule to the Income Tax Act. Tax on wealth Proceeds involving an asset that is of a capital nature not in gross income. Important note: that, for the purposes of calculating CGT, amounts which have been taken into account for income must be excluded from the ‘proceeds’ and ‘base cost’ GCT applicable PERSONS LIABLE FOR CGT -Residents CGT applies to ANY capital asset -Non - residents Only fixed property in SA ( or any right to it) and assets of a SA permanent establishment 3 ASSET CGT applies to the disposal or deemed disposal of all assets ASSET as per 8 th schedule: - Property of any nature ( movable, immovable) - Tangible and intangible assets - Coin made mainly from gold or platinum ( like kruger rands) - Rights or interest to such property Does not include currency ( cash) 4 DISPOSAL CGT on disposals and deemed disposals Disposal defined in 8 th schedule as 1) Event, act, forbearance (intentional delay) or operation of law as per paragraph 11 PARAGRAPH 11- VERY BROAD Creation, variation, transfer or extinction of asset Sale of asset Donation of asset Alienation of transfer of ownership Forfeiture of asset Termination Discharge, redemption, cancellation, surrender, release, waiver, abandonment Destruction of asset Distribution of asset to a shareholder 5 DEEMED DISPOSALS 1) Capital asset becomes trading stock Deemed to dispose @ market value at time of change in intention (Stock acquired at the same market value as per section 22(3)(a)(ii) 2) Trading stock ceasing to be trading stock Where an asset is held as trading stock and the taxpayer
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