Capital Gains Tax Flashcards
How to calculate a recoupment?
= Selling Price (limited to cost)
- Tax value
(cost - capital allowance)
CGT is applicable to? (definition)
- a portion of gain/loss on
- capital assets
- disposed of
- on/before 1 Oct 2001
- regardless of when acquired
On what assets are SA residents subject to CGT?
Worldwide assets disposed of
Steps to calculate the taxable capital gain.
- Capital gain/loss of each and subtotal of all
- less/add annual exclusion
- aggregate capital gain/loss
- less previous assessed capital loss brought forward
- net capital gain
- x inclusion rate
= taxable capital gain
What is the 4 building blocks of CGT?
- Asset
- Disposal
- Proceeds
- Base cost
How is the amount of proceeds calculated?
= amount received/accrued - amount already included
= selling price - recoupment
How is the base cost of an asset that is acquired after VD calculated?
Base Cost
= amount of qualifying expenditure - certain exclusions.
= Cost price - allowances/deductions
How is the base cost of an asset that is acquired before VD calculated?
Base cost
= VDV + expenditure after
How is the VDV calculated?
VDV = greater of
- MV
- TABC
- 20% of P-CA
How is a capital gain calculated?
CG = P - BC
When do we look at kink tests?
When a capital loss is created.
And when asset is purchased before VD.
What is the VDV according to Kink test 1?
If P < MV
Then, VDV = P - E.A
What is the VDV according to Kink test 2A?
If P < all expenses and BOTH P & MV < E.B Then; VDV = higher pf - MV - P - E.A
What is the VDV according to Kink Test 2B?
If P < all expenses and EITHER P/MV > E.B Then; VDV = lower of - MV TABC
When do we use the basic formula of TABC?
What is the formula?
Use if no capital allowances, expenses only incurred before.
Y=B + ((P-B)XN)/T+N)
