Chapter 9 Calculation of Capital Gains

Question 1

CGT calculation

Answer 1

Calculation – you simply take proceeds of sale and deduct all costs of acquisition to get the capital gain, you can also deduct incidental costs of disposal, such as legal fees.
Enhancement expenditure – any expenditure which enhances the value of the asset is also deductible, this expenditure must be reflected in the state of nature of the asset at the date of disposal. In addition, any costs incurred by the owner in preserving, establishing or defending his title to an asset are deductible. With enhancement expenditure the original cost of the asset plus any amount spent improving or enhancing the value of the asset will be allowable expenditure.