Capital Gains Tax | South Africa Tax Guide

Brief summary of CGT

CGT  is payable on the disposal of assets that take place on or after valuation date, i.e. 1 October 2001;

in the case of South African residents, the tax will apply to disposals of all assets (including overseas assets);

in the case of non-residents, the following assets will be subject to CGT:

• immovable property, or any right or interest in a property (this includes a direct or indirect interest of at least 20% held alone or together with any connected person in the equity share capital of a company, where at least 80% of the value of the net assets of the company is, at the time of the disposal, attributable to immovable property in SA); and
• any asset of a permanent establishment through which a trade is carried on in SA;

a capital gain or loss is determined by calculating the difference between the proceeds i.e. the amount accruing to the seller, and the base cost of the disposed asset;

base cost relates to the cost directly incurred in acquiring or improving the asset.

Calculation of CGT

a capital gain or loss is calculated separately in respect of each asset disposed;

once determined, gains or losses are combined for that year of assessment;

an annual exclusion of R12 500 (previously R10 000) then applies, in respect of natural persons only, to the sum of all gains and losses (R60 000 in the year of death of the person); (previously R50 000)

the resulting capital gain or loss (if not specifically excluded, disregarded or deferred) is aggregated with all other gains or losses in the current tax year, and if it is;

• an assessed capital loss, it is carried forward to the following year, or
• a net capital gain, it is multiplied by the inclusion rate ( see example).

 this taxable capital gain is included in taxable income and taxed at the normal income tax rates applicable.

Effective Tax Rates