Unit 5 - Link btw Donations Tax & CGT

Question 1

Par 38 - What may a TP add to the base cost when calculating his CG?

Answer 1

A portion of the donations tax.

Question 2

Par 22 - How is donations tax incl. in the base cost of the asset?

Answer 2

Y = (M - A)/M x D

Y = Amount to be included in base cost
M = MV of asset donated.
A = Base cost of the asset
D = Donations tax payable

Question 3

What happens if the donee pays the donations tax?

Answer 3

The donee’s base cost is increased & NOT the donor’s

Calc:

MV of asset + (Capital gain of donor/MV of asset x Donations tax pd by donee)

Question 4

For who is it more beneficial to pay the donations tax?

Answer 4

The donor - Saving in Capital gains tax takes place immediately