|
Inclusion rate |
Effective rate of tax |
Individuals, Special Trusts and
Testamentary Trusts set up for the benefit of minor children |
25% |
10% |
| All other Trusts |
50% |
20% |
| Companies and CCs |
50% |
14% |
| Individual Policyholder Fund |
25% |
7.5% |
| Company Policyholder Fund |
50% |
14% |
| Corporate Fund |
50% |
14% |
| Untaxed Policyholder Fund |
0 |
0 |
Unit Trusts (CIS) : The unitholder is
taxable
Retirement Funds : Not Taxable
The effective rate applicable to the four funds is calculated by
multiplying the inclusion rate applicable to each
fund by the tax rate of that particular fund.
For individuals and special trusts, there is a R20 000 exemption
per annum and for natural persons in the year of death R200
000
Calculation of base cost for CGT
Base cost properties acquired after 1 October 2001 is the cost
of acquiring such property.
Methods to determine base cost of an asset acquired before 1
October 2001:
- Time-based apportionment
- Market value (can be used only if property was valued by 1
October 2001)
- 20% rule
1. What is the time apportionment method?
If the taxpayer does not choose to use the market value of the
asset at 1 October 2001 as the value of that asset, or if they have
not valued the property by 1 October 2001, they must use the time
apportionment method of calculating the base cost of the asset.
This method requires that the person must know when the asset
was bought and how much it cost.
It is also necessary to know how much was spent on improving the
asset over the period it was held and when the expenditure was
incurred before or after 1 October 2001.
The legislation then provides a formula to be used in
calculating the base cost. It is therefore important that one keeps
proper records to enable the formula to be applied. It is suggested
that taxpayers seek professional advice in determining the base
cost value if this method is used.
2. Market value
| Type of asset |
Market value |
| Financial instrument listed on a recognised exchange |
Average of listed buying and selling prices at close of
business on last trading day before disposal. |
| Long-term insurance policy |
Greater of:
- Surrender value; or
- Insurer's fair market value (assume policy runs to
maturity).
|
| Unit trusts and property unit trust |
Management company's repurchase |
| Foreign unit trust interest |
Management company's repurchase price or, if not available,
selling price based on willing buyer, willing seller acting at
arm's length in open market. |
| Fiduciary,usufructuary and other |
Present value of future benefits discounted at 12% p.a. over
life expectancy of person entitled to asset or lesser period of
enjoyment. Commissioner may approve less than 12% where
justified. |
| Property subject to fiduciary, usufructuary and other like
interests |
Market value of full ownership, less value of fideicommissum or
usufruct, etc. as determined above. |
| Immovable farming property |
Land Bank value (defined in the Estate Duty Act). Effective 1
February 2006, fair market value (as defined in the Estate Duty
Act) in relation to immovable property on which a bona fide farming
undertaking is being carried on in the Republic, is the amount
determined by reducing the price dealing at arm's length in an open
market by 30%;
OR
Price based on willing buyer, willing seller at arm's length in
open market.
On disposal by death, donation or non-arm's length transaction,
only the Land Bank value may be used.
|
| Any other asset |
Price based on willing buyer, willing seller at arm's length in
open market. |
| Unlisted shares |
Price based on willing buyer, willing seller at arm's length in
open market, ignoring any:
- Restrictions on transferability
- Stipulated method of valuation
If shareholder is entitled to greater share of assets on winding
up, the value must not be less than the amount the shareholder
would have received had the company been wound up.
|
3. 20% Rule
20% of proceeds on disposal of asset