Learning Unit 8 - Capital gains tax

Question 1

What are the 10 steps to calculating capital gains tax?

Answer 1

1. Determine whether the transaction is subject to capital gains tax
2. Calculate capital gain or loss on disposal of each asset.
3. Calculate the sum of all capital gains and losses for the year of assessment.
4. Calculate the aggregate capital gain or loss by reducing the sum of all capital gains and losses by the annual exclusion (R40 000 for natural persons only).
5. Determine whether there is an assessed capital loss brought forward from the previous year of assessment.
6. Calculate the net capital gain or capital loss by reducing the capital gain/(loss) by be the assessed capital gain.
7. Determine whether there is a net capital gain.
8. Determine the inclusion rate applicable to the tax payer.
9. Calculate the taxable capital gain by multiplying the net capital gain by the inclusion rate.
10. The taxable capital gain is added to other taxable income for the year of assessment to calculate total income for the year.

Question 2

What is the annual inclusion rate for capital gains for companies (non-natural persons)?

Answer 2

80%

Question 3

What is the annual inclusion rate for capital gains for natural persons

Answer 3

40%