Introduction to capital gains tax
| OUTCOMES OF TOPIC After studying this topic on the introduction to Capital Gains Tax (CGT), you should be able to: ✓ Understand what Capital Gains Tax is; ✓ Understand where Capital Gains Tax fits into the Income Tax framework for companies; ✓ Understand that the Eighth Schedule contains the provisions in respect of Capital Gains Tax and how to apply these provisions to determine its inclusion in a taxpayer’s taxable income calculation; ✓ Understand the basic working of CGT; ✓ Understand the process to calculate a taxable capital gain or assessed capital loss to be included in a taxpayer’s taxable income; ✓ Understand when CGT will be triggered; ✓ Understand which questions in the ITR14 tax return “form creation” section to answer in order to disclose capital gains and capital losses. ✓ Determine when will a disposal by a resident be subject to CGT; ✓ Determine when will a disposal by a non-resident be subject to CGT in South Africa; ✓ Establish the proceeds received or accrued on the disposal of an asset; ✓ Determine whether an asset is a pre-valuation date asset or post-valuation date asset; ✓ Determine the base cost of an asset which is disposed of or deemed to be disposed of; ✓ Understand which paragraph to apply to determine the valuation date value of a pre-valuation date asset if a potential capital gain is realized; ✓ Understand which paragraph to apply to determine the valuation date value of a pre-valuation date asset if a potential capital loss is realized; ✓ Understand the methods available and how to apply them to determine an assets valuation date value if the asset was acquired before 1 October 2001; ✓ Understand that post-valuation date expenses should be added to the valuation date value to determine an asset’s base cost; ✓ Complete the capital gains section on the ITR14 return. |