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Home » Types of Tax » Capital Gains Tax

Capital Gains Tax

Capital gains tax (CGT) is not a separate tax but forms part of income tax. A capital gain arises when you dispose of an asset on or after 1 October 2001 for proceeds that exceed its base cost.

The relevant legislation is contained in the Eighth Schedule to the Income Tax Act 58 of 1962.

Capital gains are taxed at a lower effective tax rate than ordinary income. Pre- 1 October 2001 CGT capital gains and losses are not taken into account. Not all assets attract CGT and certain capital gains and losses are disregarded.

A withholding tax applies to non-resident sellers of immovable property (section 35A). The amount withheld by the buyer serves as an advance payment towards the seller’s final income tax liability.

Who is it for?

CGT applies to individuals, trusts and companies.

A resident, as defined in the Income Tax Act 58 of 1962, is liable for CGT on assets located both in and outside South Africa.

A non-resident is liable to CGT only on immovable property in South Africa or assets of a “permanent establishment” (branch) in South Africa. Certain indirect interests in immovable property such as shares in a property company are deemed to be immovable property.

Some persons such as retirement funds are fully exempt from CGT. Public benefit organisations may be fully or partially exempt.

How does CGT work in relation to an inheritance?, click here for more information.

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Frequently Asked Questions

FAQ: Who should have done the valuation? By what date should my property have been valued? Who must hold the valuation certificates? When must valuations be submitted and to whom?

5.1 The taxpayer disposing of the asset was responsible for...

FAQ: How must I value my shares on valuation date and can I use the time-apportionment basis?

South African-listed shares The following valuation date values may be...

FAQ: In the case of a couple married in community of property, will a capital gain on an investment in the name of one of the partners be regarded as a capital gain accruing to both partners?

Under paragraph 14 of the Eighth Schedule a disposal of...

FAQ: What is base cost?

Base cost is the amount against which any proceeds upon...

FAQ: I own a flat through shares in a share block company. I reside in the flat when on holiday, and rent it out the rest of the year. What will the CGT implications be if I sell my shares in the share block company?

The definition of “an interest” in paragraph 44 of the...

Last Updated:
22/03/2021
11:17

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