Capital Gains Tax: Companies Course

The absence of a CGT creates many distortions in the economy, by encouraging taxpayers to convert otherwise taxable income into tax-free capital gains. The South African Revenue Service has observed that sophisticated taxpayers have engaged in these conversion transactions, thereby eroding the corporate and individual income tax bases. This erosion reduces the efficiency and equity of the overall tax system. A CGT is, therefore, a critical element of any income tax system as it protects the integrity of the personal and corporate income tax bases and can materially assist in improving tax morality.

While gains realised by companies are taxed at the normal CIT rate, only 80% of gains are included in taxable income, making the effective capital gain tax rate for companies 22.4% (for tax years ending before 31 March 2023) and 21.6% for tax years ending on or after 31 March 2023.

During this course, the key principles relating to Capital Gains Tax for companies will be discussed.

Topics Discussed:

• Income Tax Framework – Companies
• Capital Gains Tax Structure – Companies
• Definition of an asset for Capital Gains Tax purposes
• Capital Gains Tax implications – On disposal of an asset
• Capital Gains Tax implications – On a deemed disposal
• Base Cost
• Proceeds
• Capital Gains Tax consequences – On the sale of share
• Capital Gains Tax consequences – On the sale of a business