Basics of Capital Gains Tax for Corporates
Every business has assets and needs to account for capital gains or losses on the disposal thereof. Although Capital Gains Tax (CGT) has been part of the South African Legislation since 2001, the calculation of CGT can still be challenging to taxpayers.
This webinar aims to improve the understanding of the basic mechanics of capital gains tax, as well as to an awareness of some of the more complex areas that need to be considered and applied when preparing or reviewing capital gains/losses in a year of assessment.
By the end of this webinar participants will have a understanding of the basic capital gains tax and will be able to answer the following questions:
- When is CGT triggered?
- Where does CGT fit into the corporate tax calculation?
- What is the process to calculate a taxable capital gain or assessed capital loss?
- What are the building blocks of a basic CGT calculation?
- Where do you disclose capital gains items on the ITR14 Tax Return?
- What is the impact of CGT on your provisional tax estimates and payments?
The outline of this webinar is as follows:
Overview of CGT
We will introduce the basic principles of CGT including:
- Who is liable for CGT.
- When is CGT triggered.
- Where CGT fits into the corporate income tax calculation.
- The process of calculating the net capital gain or assessed capital loss.
- Awareness of ring-fencing provisions applicable to capital losses.
Buildings blocks of CGT
In order to calculate a capital gain of loss, four elements have to be determined. The following will be discussed in more detail:
- Assets
- Disposals
- Proceeds (focusing on Para 35 of the Eighth Schedule)
- Base Costs (focusing on Para 20 of the Eighth Schedule)
Note: The webinar will not cover how to determine the base cost of pre-valuation date assets (i.e. assets acquired before 1 October 2011).
Roll-overs
This session covers the CGT principles that apply on the disposal or replacement of an allowance asset (paras 65 & 66).
Disclosure of CGT in ITR14
Disclosure requirements relating to the disclosure of capital gains / losses, including discussion of the treatment of foreign capital gains / losses will be dealt with.
CGT and provisional tax
Provisional taxpayers are required to make an estimate of their taxable income that will be derived for a year of assessment for the purposes of determining their first and second provisional tax payments. Are you aware of the rules which determine into which of these estimates capital gains needs to be included?
Note: The webinar will not cover the tax treatment of company distributions (i.e. dividends, contributed tax capital or return of capital. This will be covered in a webinar taking place later in the year.