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South Africa Capital Gains Tax, Info and Rates |
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Tax – Capital Gains tax
Overview
In South Africa, Capital Gains Tax is not a separate tax, but forms a part of the income tax system and is a tax on capital gain. Capital Gains tax was introduced into the Income Tax Act in 2001.
A capital gain arises when the proceeds upon the disposal of an asset exceed its base cost.
| Proceeds received or accrued in consequence of the disposal of an asset |
R xxxxxx |
| Less: The base cost of an asset: |
(xxx) |
| Capital Gain |
R xxxxx |
For individuals, 25% of the net capital gain, after deducting the annual exclusion of
R 16 000 is included in taxable income and is subject to tax at the marginal rate of the individual. In a worst case scenario, assuming that the highest income tax rate of 40% is applicable, there is an effective 10%tax on the capital gain:
40% of 25% capital gains = 10%
Are there any exclusions to Capital Gains Tax?
Yes, there are exclusions, for personal use assets for example you do not have to pay CGT (eg private motor vehicle)
Are there any exclusions for property?
Yes, the first R 1.5 million of the capital gain on disposal of your prime residence must be disregarded.
What is primary residence?
A primary residence is the residence you ordinarily reside in, which is your main residence and which is used mainly for domestic purposes.
Do I pay capital gains tax on my worldwide assets?
Yes, as soon as you are a tax resident in South Africa you pay CGT on your worldwide assets
Can there be double tax?
Yes, it could happen that two countries charge CGT.
Do non-tax residents also have to pay CGT?
Yes, non residents are subject to CGT in respect of; for example the disposal of fixed property situated in South Africa
The above article was contributed by Fiona Fluegel of the Incompass Group. Incompass can be contacted here.
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