Page 55 - Bespoke EPG 2017 Digital

CAPITAL GAINS TAX

General

■■ Capital gains tax was implemented on 1 October 2001.
■■ It is triggered by the disposal on or after valuation date of any asset of a

South African resident, irrespective of where in the world the asset is held,
and certain assets of a non-resident.
■■ Assets include property of whatever nature, whether movable or immovable,
corporeal or incorporeal, except for currency (with the exception of gold and
platinum coins).
■■ 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 costs directly incurred in acquiring or improving the
asset.
■■ The Income Tax Act has set out certain valuation rules and methods of
calculation of the base cost. Due to limitations in scope of this guide, a
comprehensive discussion on all aspects of capital gains tax, including
valuation rules, is not possible, and the estate planner is advised to consult
with his adviser for more detail.
■■ Certain assets are excluded, such as personal use assets (see below for list
of assets excluded from a deceased estate).
■■ The first R2 million of the capital gain or loss incurred on the disposal of
a primary residence is excluded from capital gains tax (applies to a South
African resident and a natural person or special trust [set up for mentally ill
or seriously physically disabled persons] which owns property as a primary
residence.
■■ Once the taxable capital gain is calculated, it is included in taxable income
and taxed at normal income tax rates applicable.

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