Capital Gains Tax

Who is liable to pay Capital Gains Tax in South Africa?

Taxpayers, including individuals, trusts, companies and close corporations, will be taxed on the profit they make when they sell an asset or property. Capital Gains Tax is basically a tax on the resale of assets.

Capital gains tax (CGT) applies to the disposal of assets by the following:

• South African residents (CGT applies to worldwide assets);
• Non-South African residents for immovable property in South Africa (including immovable property held through a company) and assets of a branch or agency in South Africa.

The portion of the gain (inclusion rate) included in taxable income is 25 per cent for an individual, special trust or an insurer’s individual policyholder fund, and 50 per cent for other taxpayers, e.g. a company, close corporation, business or family trust. Capital losses can be deducted from capital gains or carried forward to future assessment years, but they cannot be offset against revenue income.

The first R2 million (€206,503) of the gain on a primary owner-occupied residence is exempt from CGT, as are the following:

• Transfers of property from a deceased spouse;
• Transfers between spouses;
• An individual’s belongings;
• Private motor vehicles;
• Small business assets;
• Transactions subject to income tax;
• Gambling proceeds.