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Capital loss limintation and exclusion principles

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 contain 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 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 realised;
✓ Understand which paragraph to apply to determine the valuation date value of a pre-valuation date asset if a potential capital loss is realised;
✓ 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.