On the SARS website they refer to the CGT rate as 18% for an individual, if and when does this apply?
Important:
This answer is based on tax law for the tax year ending 28 February 2020.
Answer:
RSA doesn’t have a stand-alone capital gains tax. There is therefore not a rate of 18% for individuals, as is stated on the SARS website and is probably colloquially said as well.
This is how the numbers on the SARS website were arrived at – I do it for the 2020 year of assessment only.
Individual or a special trust:
If one multiplies 45%, the maximum rate that applies to individuals whose taxable income exceeds R1,5 million, with 40%, the inclusion rate for natural persons, you get 18%.
For a company, it is 28% (the tax rate for normal companies) times 80% (the inclusion rate) = 22.4%.
And for trusts, it is 45% (the tax rate for ‘normal trusts’) times 80% (the inclusion rate) = 36%.
The rate of 18% are therefore an indication of the maximum marginal rate of tax that can apply to a taxable capital gain made by a natural person.