GORDON BELL, Cape Town | Monday
SOUTH African taxpayers will have to spend a little more time planning their financial affairs from Monday when the controversial capital gains tax (CGT) finally comes into effect.
The ”wicket-keeper” tax has been at the forefront of many taxpayers minds since Finance Minister Trevor Manuel mooted the measure in February 2000.
Its introduction was delayed by six months from April this year, and now takes effect on October 1.
It is expected to generate between R1-billion and R2-billion for government’s coffers.
The provisions include that 25% of an individual’s capital gain –profits generated on investments — will be taxed at the appropriate marginal rate, and 50% of the gain for corporates.
This translates into an effective maximum rate of 10,5% for individuals and 15% for companies.
The first R10_000 gain, however, will be exempt, and the first R50_000 on death, which in terms of the regulations is regarded as a disposal.
A primary residence will be exempt from CGT, up to a maximum of R1-million over and above the price originally paid for the home.
Personal assets, such as private motor vehicles, not used for trade, will also be exempt from CGT. – Sapa