Page 10 - Robin Twaddle PTG 2017 Digital

Allowable capital expenditure includes the following:
◆◆ The cost of acquiring, creating or improving the asset (excluding any borrowing costs).
◆◆ The cost for valuation of the property for CGT purposes.
◆◆ Cost incurred in respect of disposal of the property (including sales commission,

advertising, valuation costs, accounting and legal costs, removal cost etc.).

A capital gain or loss is calculated separately in respect of each asset disposed. Once
determined, gains or losses are combined for that year of assessment and if it is:
◆◆ An assessed capital loss, it is carried forward to the following year; or
◆◆ A net capital gain, it is multiplied by the inclusion rate and included in taxable income.
◆◆ Annual exclusion of R40 000 capital gain or capital loss is granted to individuals and

special trusts.
◆◆ Instead of the annual exclusion, the exclusion granted to individuals is R300 000 for

the year of death.

The inclusion rates are as follows:

PERSON 2017 2018
Natural person and special trust 40% 40%
Company *80%* *80%*
Trust 80% 80%

* The company inclusion rate applies for years of assessment starting after 1 March 2016.

PRIMARY RESIDENCE EXCLUSION

When a primary residence is disposed of capital gains up to R2 million is exempt from CGT.
The following are the main provisions relating to primary residences:
◆◆ The exemption is applicable to natural persons and special trusts.
◆◆ Only one residence at a time may be a primary residence of a person.
◆◆ The exemption is applicable if a person merely has an interest in the residence. As a result

a share in a share block company and a usufruct may qualify (subject to further provisions).
◆◆ If the residence is held by more than one person as a primary residence an

apportionment of the R2 million must be made in relation to their interest.
◆◆ An apportionment of the profit must be done if the person used the house as a primary

residence for only part of the time it was owned. If a person was absent from the
residence for less than 2 years as a result of the residence being offered for sale and
vacated due to the intended acquisition of a new primary residence, the residence
being erected on land acquired, the residence being accidently rendered uninhabitable
or the death of that person, it will not be seen as an absence from the residence.

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