BEL 300 Study notes STUDY UNIT 3: CGT INTRODUCTION No separate CGT in SA CGT incorporated into Income Tax Act Taxable gain of a person in a YOA is included in taxable income and is therefore subject to normal tax (s26A) D/mined under the 8th Schedule S26A forms the link between the Act and the 8th Schedule Only applies to disposals on/after 1 OCTOBER 2001 REMEMBER! Taxable capital gains are subject to normal tax, rather than a separate CGT Only a certain % of person’s net capital gains included in taxable income SCOPE OF CGT No section w/in legislation that indicates whether a gain is capital / revenue in nature & no category of A’s that is automatically held to result in capital gain/loss when disposed of (EXCEPT: certain share disposals in s9C) determine if disposal revenue in nature (basic principles of income tax) If d/mine it is: loss/gain subject to income tax NOT CGT Proceeds are then specifically excluded to calculate CGT Any exp. Used for normal tax purposes is excluded from BASE COST used to calculate CGT Golden rule: all gains must be dealt with under the principal Act OR under the 8th Schedule Act takes precedent over 8th Schedule DISPOSAL PROVISION CALCULATION OF GAIN INCLUDE IN APPLICABLE WHERE (A) SOLD TAXABLE INCOME Revenue in nature Income Tax Act Include proceeds (or recoupment) in Full amount included in GI TI exp. / allowance Deduct: Capital in nature 8TH Schedule Calculate proceeds (excl. any GI inclusion rate and amounts) include PORTION into taxable income Deduct: BC (exclude any deduction allowed ito Income Tax Act) PERSONS LIABLE FOR CGT (par 2)
BEL 300 Study notes STUDY UNIT 3: CGT INTRODUCTION No separate CGT in SA CGT incorporated into Income Tax Act Taxable gain of a person in a YOA is included in taxable income and is therefore subject to normal tax (s26A) D/mined under the 8th Schedule S26A forms the link between the Act and the 8th Schedule Only applies to disposals on/after 1 OCTOBER 2001 REMEMBER! Taxable capital gains are subject to normal tax, rather than a separate CGT Only a certain % of person’s net capital gains included in taxable income SCOPE OF CGT No section w/in legislation that indicates whether a gain is capital / revenue in nature & no category of A’s that is automatically held to result in capital gain/loss when disposed of (EXCEPT: certain share disposals in s9C) determine if disposal revenue in nature (basic principles of income tax) If d/mine it is: loss/gain subject to income tax NOT CGT Proceeds are then specifically excluded to calculate CGT Any exp. Used for normal tax purposes is excluded from BASE COST used to calculate CGT Golden rule: all gains must be dealt with under the principal Act OR under the 8th Schedule Act takes precedent over 8th Schedule DISPOSAL PROVISION APPLICABLE CALCULATION OF GAIN WHERE (A) SOLD INCLUDE IN TAXABLE INCOME Revenue in nature Income Tax Act Include proceeds (or recoupment) in GI Deduct: exp. / allowance Full amount included in TI Capital in nature 8TH Schedule Calculate proceeds (excl. any GI amounts) Deduct: BC (exclude any deduction allowed ito Income Tax Act) inclusion rate and include PORTION into taxable income PERSONS LIABLE FOR CGT (par 2)
CGT-Study-notes-part-1-4.docx