Capital gains tax – method of valuation on the disposal of shares

Authors: Gigi Nyanin and Nicole Paulsen (DLA Cliffe Dekker Hofmeyr) Capital Gains Tax (CGT) is payable on the disposal of capital assets which were in the seller’s possession on, or were acquired after 1 October 2001 (valuation date). A capital gain or loss is determined by calculating the difference between the proceeds and the base cost of the disposed asset.

SARS has eye on property taxes

Author: iAfrica.com Established Cape Law firm, Herold Gie Attorneys, who this year celebrate 120 years of legal expertise, recently held an informative property and tax seminar at the Cape Town Hotel School attended by a number of property professionals from across the city.  Presented by Di Seccombe, National Head of Tax Training at audit and advisory firm Mazars, the seminar delivered a broad analysis of the recent 2014/2015 Budget Speech, as well as recent legislative and administrative changes that impact the SA property industry and real estate agents in particular.

Determining the base cost of the repayment of an interest-free loan acquired for less than face value

Author: Okkie Kellerman and Esther Geldenhuys of ENSafrica Introduction The Eighth Schedule to the Income Tax Act, 58 of 1962 (“the Act”) creates a tax liability known as capital gains tax which applies generally where an asset is disposed of. A loan is regarded as an “asset” in terms of the definition in paragraph 1 of the Eighth Schedule as it is an incorporeal asset whereby the lender acquires a right to claim payment from the borrower. Where part of a loan is repaid it constitutes part of an asset disposed of and it will be necessary to allocate a part of the base cost of the loan to the part of the loan repaid in order to determine the capital gain or capital loss in respect of the disposal of that part.

Developments in the taxation of collective investment schemes

Author: Toinette Beckert by ENSafrica Section 25BA prior to 1 January 2014 Prior to the recent amendments in the Taxation Laws Amendment Act No. 31 of 2013 (“the TLAA”), a collective investment scheme (“CIS”) was taxed on a semi-flow through regime in terms of section 25BA of the Income Tax Act No. 58 of 1962 (“the Act”).  Accordingly, amounts (other than amounts of a capital nature) received by or accrued to a portfolio of a CIS (other than a portfolio of a CIS in property) were deemed to have directly accrued to a person to the extent that the amounts were distributed by the CIS to such person not later than 12 months after its accrual to the CIS and if that person was entitled to the distribution by virtue of holding a participatory interest in the CIS.

Determining the Base Cost of the repayment of an interest-free loan acquired for less than face value

Authors: O. Kellerman and E. Geldenhuys (ENS) Introduction The Eighth Schedule to the Income Tax Act, 58 of 1962 (“the Act”) creates a tax liability known as capital gains tax which applies generally where an asset is disposed of. A loan is regarded as an “asset” in terms of the definition in paragraph 1 of the Eighth Schedule as it is an incorporeal asset whereby the lender acquires a right to claim payment from the borrower. Where part of a loan is repaid it constitutes part of an asset disposed of and it will be necessary to allocate a part of the base cost of the loan to the part of the loan repaid in order to determine the capital gain or capital loss in respect of the disposal of that part.

Capital Gains Tax and The effects of inflation

The South African capital gains tax (CGT) regime does not provide for indexation: it does not take into account the effect that inflation may have on capital profits over time.   Consider the following example: A company bought an asset on 1 January 2002 for R1 000. The company sold the asset on 1 January 2013. The inflation rate during that period was, for example, 6% compounded annually. The company realised a return of, for example, 10% compounded annually, that is, a return of 4% above inflation compounded annually. Accordingly, the company sold the asset for an amount of R2 853. The company realised a nominal profit of

Capital Gains Tax – Reits, recoupments and assessed losses

Author: Louis van Manen (Grant Thornton) The Taxation Laws Amendment Bill of 2013 (TLAB) contains a proposed amendment to the newly introduced Real Estate Investment Trust (REIT) legislation which should be welcomed by such trusts. While it is generally assumed that the tax burden associated with income and capital gains of REITs is effectively shifted to shareholder level under the REIT legislation, it will not always be the case under the current legislation. Despite enjoying exemption from Capital Gains Tax (CGT) on most immovable

2014 – The South African “Tax Year” Ahead In Perspective

Aurthor: Hugo Van Zyl (Cross Border Tax and Exchange Control Specialist) The first and very important note to make, in dealing with South African tax issues: tax year 2014 ends on the last day of FEBRUARY 2014. The South African tax year for most individuals, are 1 March until the last day of February in the next calendar year. Corporates can change their tax year-end to align with the last day of their financial year-end, yet Trusts partners in a JV or partnership, are obliged to file assuming a tax year-end on the last day of February, despite their financial year-end being the last day of another month. Yes, sadly this date, Friday 28th 2014, is not even listed on the SARS webpage on important dates, yet is an extremely important tax deadline.

UK capital gains tax ‘is bad news for SA’

SOUTH Africans with property in the UK will in future be liable for capital gains tax there once they sell their property, following an announcement last month that the tax will be introduced in the UK from April next year. The South African economy is likely to lose revenue because of the step, as the UK would in future be getting the tax instead of South Africa, Michael Honiball, partner in the tax department of law firm Webber Wentzel, said on Tuesday. South Africa’s domestic laws,

VAT – Fixed property acquired from non-vendor

Although old news to some, there still seems to be little awareness regarding the interplay between value-added tax (VAT) and transfer duty, and the benefits stemming from the ‘not so recent’ amendments to the Value-Added Tax Act No. 89 of 1991 (the Act), as applicable to fixed property acquired by a VAT vendor from a non-vendor on or after 10 January 2012.