Chapter 3 – Capital Gains Tax – Contents Page

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3. Chargeable gains and capital gains tax liabilities in situations involving overseas aspects, company liquidations, and in relation to connected persons and trusts and the application of additional exemptions and reliefs

a) The contents of the Paper F6 study guide for chargeable gains under headings:

b) The scope of the taxation of capital gains: [3]

i) Determine the tax implications of transfers between a husband and wife

ii) Identify the concepts of residence and ordinary residence and determine their relevance to capital gains tax

iii) Determine the South African taxation on foreign gains

iv) Conclude on the capital gains tax position of individuals coming to and leaving South Africa

v) Advise on the capital gains tax implications of foreign currency movements

vi) Advise on the capital gains tax implications of gains made in trusts.

c) The basic principles of computing gains and losses: [3]

i) Identify connected persons for capital gains tax purposes and advise on the tax implications of transfers between connected persons

ii) Advise on the impact of time of disposal and conditional contracts

iii) Evaluate the use of capital losses.

d) Gains and losses on the disposal of movable and immovable property: [3]

i) Advise on the tax implications of part disposals

ii) Determine the gain on the disposal of leases and wasting assets iii) Establish the tax effect of appropriations to and from trading stock

iv) Establish the tax effect of capital sums received in respect of the loss, damage or destruction of an asset.

e) Gains and losses on the disposal of shares and securities: [3]

i) Explain the treatment of options

ii) Apply the rules relating to reorganisations, reconstructions and amalgamations and advise on the most tax efficient options available in given circumstances

iii) Calculate capital distributions and the effects on full or partial share disposals.

f) The use of exemptions and reliefs in deferring and minimising tax liabilities arising on the disposal of capital assets: [3]

i) Value shifting arrangements

ii) Capital gains and losses arising on death: Capital and losses in deceased estates

iii) Understand the effects of the various attribution rules for trusts.

Excluded topics

The scope of the taxation of capital gains:

  • • Detailed knowledge of the statements of practice on partnership capital gains.
  • • Capital gains on retirements benefits
  • • Overseas aspects of capital gains tax in relation to trusts
  • • Collective investment schemes
  • • The grant of a lease or sub-lease