The loss-limiting formula ‘proceeds less post-valuation date expenditure’ will always result in a no gain or loss situation.
In order to understand this formula it is necessary to begin with the core base cost formula:
Base cost = valuation date value (VDV) + post-valuation date expenditure
A no gain or loss situation arises when:
Base cost = Proceeds.
This can be restated as:
VDV + post-valuation date expenditure = Proceeds
And then rearranged as:
VDV = Proceeds – post-valuation date expenditure
Proceeds
Calculating a capital gain or loss
Essentially the ‘proceeds less post-valuation date expenditure’ formula works backwards to arrive at a VDV that will yield neither a gain nor a loss after the post-1 October 2001 expenditure is added to it.
Related Documents
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...
Read MoreFAQ: 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...
Read MoreFAQ: 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...
Read MoreFAQ: What is base cost?
Base cost is the amount against which any proceeds upon...
Read MoreFAQ: 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...
Read More
