What are the rules in respect of exemption of capital gain?

Capital gains should not be more than the investment amount. If only a portion of gains were reinvested, an exemption under capital gain would be applicable only on the amount that was reinvested. Specified assets must be held for at least 36 months.

What is an untaxed policyholder fund?

The Untaxed Policyholder Fund (UPF) for policies owned by untaxed entities and annuity contracts. It consists of policies owned by retirement funds and other tax exempt entities and annuity contracts currently paying annuities.

The investment made should not be less than the capital gain. If a part of the gain is invested, then the proportionate amount will be exempted while the balance amount will be taxable. Assessee must retain the new asset for a minimum of 3 years.

When do you pay CGT on capital gains?

All capital gains or losses made on the disposal of capital assets will be subject to CGT unless excluded by specific provisions. However, where an asset was acquired before the effective date and disposed of thereafter, tax will only be payable on the capital gain which accrued after the effective date.

Where does capital gain go on a tax return?

A taxable capital gain is included in a taxpayer’s taxable income in terms of section 26A and an assessed capital loss is carried forward to be offset against capital gains in future years of assessment.

When is a capital gain taxable in a trust?

It is proposed that a capital gain arising from the disposal of a trust asset will be taxable either in the hands of the trust or where an attribution rule applies, in the hands of a beneficiary or a person who made a donation, settlement or other disposition to the trust”.

Why are capital gains taxed in South Africa?

The absence of a CGT creates many distortions in the economy, by encouraging taxpayers to convert otherwise taxable income into tax-free capital gains. The South African Revenue Service has observed that sophisticated taxpayers have engaged in these conversion transactions, thereby eroding the corporate and individual income tax bases.