Cgt Flashcards
Cgt para12(3) inventory becoming capital
Bc equal recouped amt ito s22(8) at mv
Cgt para35 proceeds
Include
Debt owed and discharged. Amount received for leasehold improvements by lessee
Reduce by
Amt included in normal income. Proceeds repayable.
Cgt para 14 disposal icop
Deemed equal disposal if in joint estate
Cgt para 38 disposal by donations and transactions between connected persons not at arms length
Deemed disposal at mv. Unless if company distributes shares for no value the deemed acquired at 0
Cgt para 39A disposal of asset for unaccrued amt of proceeds
Disregard capital loss until amount fully accrued. Carry that forward and deduct from future proceeds and allow in year when no more accruals will occur
Cgt para20 base cost
Includes
Cost of acquisition, valuation, direct cost of disposal including donation tax and cost of option to acquire.
Cost of establishing maintaining or defending legal title. Improvements. One third of interest in respect of a listed share.
Amounts included in income as a result of acquisition of asset or another event. Recoupments of leases , amount included in lessors income in respect of obligatory leasehold improvements by lessee
Exclude
Borrowing cost, expenditure on repairs, amounts allowed as a deduction in income but not included in income. Capital allowances
Cgt para 33 Part disposal
Where part of asset is disposed method used to determine para20 cost is
Mv of part divided by mv of total asset on disposal x cost
Does not apply if can specifically allocate
Cgt para 44-50 primary residence exclusion
Disregard gain or loss of R2m on primary residence
Must use residence mainly for domestic purposes
Apply per primary residence thus a portion if interest held
Only for land of up to 2 ha used mainly for domestic
Land must be disposed at same time
Gain must be disregarded if proceeds less than 2m
If not ordinarily resident for entire period, apportion gain or loss to be disregarded,unless one of reasons allowed applies for not more than two years
If property not used as primary residence for entire ownership, take out portion not used before using exclusion. If used partly for trade, take out that portion. Then allow exclusion. Amounts taken out will be included in capital gains.
If residence was let for domestic purpose and certain conditions apply, will still be deemed primary residence
Cgt para 15 53 personal use assets
Gains and losses disregarded
Personal use asset is used mainly for purposes other than trade
Excluding
Gold coins, immovable property, aircraft >450kg, boat >10m, financial instruments, fiduciary interest, insurance contract
Losses on the assets mentioned above will be disregarded if they are used not in trade
Cgt para 54+55 retirement benefits and insurance policy
Retirement benefits paid in lump sums gains or losses are disregarded
Long term insurance is also disregarded as long as not foreign or second hand
Cgt para56 disposal by creditor of debt owed to connected persons
Creditor must disregard any capital loss as a consequence of this.
Certain exclusions
Cgt para39 losses in respect of disposal to connected persons
Disregard loss made but allowed to deduct loss from gains made by selling assets to same connected person if they are still a connected person at sale
Cgt para 57 disposal of small business assets
Gain disregarded if disposal of active business asset, ie immovable property or other assets used wholly and exclusive for business.
Investment assets are excluded
Must be held for 5years, person involved in operations, mv of assets not more than 10m, person is 55 or ill
Ltd to 1.8m
Cgt para 57A 59-65B other exclusions
Gains ons immovable property in micro business, gambling, equity unit trust, pbo donations, gains and losses on assets used solely for exempt income.
Cgt para 65 involuntary disposal
Disposed of by theft or destruction or law. Proceeds as compensation and exceed base cost, amount at least as much as receipt and accrual wil be invested in replacement asset within 12 months, replacement asset will be brought into use within 3years. Not for personal assets.
Elect capital gain to be disregarded. Apportion gain to assets if more than one replacement assets acquired.
Include capital gain to extent allowance allowed in year in proportion t entire allowance.
If dispose of replacement asset, disregarded gain included
Cgt para66 reinvestment in replacement assets
May elect if asset qualified for a capital allowance, proceeds exceed base cost, amount of at least as much as receipt or accrual will be spent on replacement asset under same capital allowance, bought within 12 months and brought into use within 3 years.
Gain disregarded
Apportion if more than one asset acquired.
Treat disregarded gain as gain in proportion with allowances or when sold or cease to use
Cgt para67 transfer asset between spouses
Gain or loss disregarded and base cost carried over same for divorce order or death to spouse.
Does not apply if spouse non resident unless a cgt asset for non residents
Cgt para 17 losses on forfeited deposits
Disregarded unless for personal assets
Cgt para 19 losses on disposal of shares
Disregard loss to extent not exceed extra ordinary dividend received in previous 18 months prior to or as part of disposal.
Extraordinary dividends is portion of dividends received in excess of 15 of proceeds in 18 months .
If share buy back- loss disregarded up to exempt dividends received in previous 18 months. Thus not subject to dividend tax and exempt from normal tax
Cgt para 74-79 company distributions
Distributions from ctc is not a dividend, thus cgt for recipients.
Made in cash when paid by listed company or earlier of paid or becomes due other companies, or if in specie earlier of paid or due.
In specie. Disposal at mv.
On or after 1 April 2012 76B:
Prior to disposal, and acquired before 1 October 2001, for purpose of determining date of acquisition and qualifying expenditure, deemed:
Disposed share immediately before distribution at mv
Reacquired at mv less hypothetical capital gain or add loss.
If not pre valuation date shares. Qualifying expenditure must be reduced by mv of distribution, excess will be treated as a capital gain.
Used after pre valuation was adjusted as well as new date was determined.
Cgt para 40-41 deceased estate
Cgt event as deemed disposal at mv. Estate or if go directly to heir, acquires asset at that mv, unless to spouse. From estate to heir will be at same base cost.
If estate dispose to other person there may be a capital gain or loss.
If gains is more than 50% of net estate value, and executor required to dispose an asset to pay the tax, the heir of that asset may elect to pay amount over which is more than the 50% in 3years and get the asset
Cgt para 43 disposal and acquisition in foreign currency
Natural person. Not carry on trade. Dispose asset in foreign currency and base cost was also in that same currency. Gain or loss must be determined in same currency and then translated using avg rate in year disposed or spot.
A person. Proceeds in foreign currency and expenditure in foreign (not necessarily the same) currency. Translate proceeds and base cost either at spot or avg for either(can be different for each).
Where person get deemed proceeds, and base cost in foreign currency, proceeds must be treated as being denominated in that currency
If pre valuation date asset used mv, translate at spot on 1 October 2001
Cgt s9C disposal of shares deemed capital
Amount received for disposal of qualifying share deemed capital. Qualifying share includes, equity share disposed of and owned for 3 years. Must be resident company.
Does not apply if person was connected person of the company and more than 50% of the mv of the company relates to immovable property other than held for 3 years or held by non connected person or the company acquired the asset in the previous 3 years and amount were paid by any to any person other than company for its use.
Thus no inclusion in taxable income of loss of gain
Cgt S9H change of residence, ceasing to be a cfc or becoming a headquarter company
Person other than company
Deemed disposal and require at mv. Year of assessment ends and start on date of change.
Company
Same as for person but year end does not apply for cfc, then it is foreign tax year.
Company deemed to pay dividend day before change of asset in specie of sum of all mv of shares less ctc.
Cgt para12A reduction of debt
Debt owed is reduced and was used to fund directly or indirectly for expenditure in respect of allowance asset, or was not allowed as a deduction.
The amount of reduction exceed the consideration paid for reduction.
If asset still held. Reduce para 20 expenditure
If asset no longer held or exceed expenditure, reduce any capital loss of that person (does not apply for allowance assets)
If pre valuation date asset, for purposes of determining dat of acquisition and qualifying expenditure, treat as having disposed immediately before reduction at mv and reacquired it at mv less gain or add loss. This becomes the qualifying expenditure.
12A does not apply
Inheritances, donations, same group of companies
Thus if debt donated gratuitously, 12A will not apply
S19 deals with allowance assets, first reduce base cost and remainder will be a s8(4)a recoupment
Cgt s24BA assets acquired in exchange for issue of shares
Where mv of asset exceeds mv of shares, excess is capital gain for the company
The acquirer of the shares will have a reduction in the base cost if held as capital or reduction of 11 a or 22 1 if trading stock.
If shares exceed mv of asset, excess deemed dividend and treated as a distribution in specie.
Not apply if, part of same group, person holds all shares after the issue
Cgt para2 80% rule
Immovable property in SA include shares if 80% of th mv of the interest relates directly or indirectly to immovable property and the person together with connected persons hold at least 20%
