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Capital Gains Tax : Frequently Asked Questions on the Capital Gains Tax Proposals

Mallinicks on Capital Gains Tax
1. When is capital gains tax chargeable, and payable ?
2. Will the sale of my primary home be subject to CGT ?
3. What is a primary residence ?
4(a) Is the primary residence exclusion an unlimited exclusion.?
4(b) Will it apply to a residence held through a company or a trust?
5. I have a home in a company/Trust. Is there a way to correct the situation so that I can enjoy the primary residence exclusion ?
6. What happens if I do not ordinarily reside in my home as I have moved before selling it, I am still building a home on a new property, or for some other reasons?
7. I work in Johannesburg where I bought a townhouse to stay. MY wife and three children still stay in Umtata, my hometown, where I have my main home. Will the sale of my townhouse qualify for the primary exclusion when I move back to Umtata?
8. I am married to three wives in terms of customary law. My wives stay in three different homes that I own. Which home is my primary residence for CGT purposes?
9. What happens if I dispose of my primary residence in a Joint estate, and I have a capital gain in excess of R1 million?
10. How must I value my shares and could I use the time-apportionment basis?
11. I own a flat via 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 ?
12. We are an exempt institution. What is the effect of CGT on us?
13. How will my demutualisation shares be treated for CGT ?
14. Should I sell my assets before valuation date to avoid CGT?
15. Should I have my assets valued at valuation date?
16. I have been contemplating emigration and now with the implementation of CGT, should I not do so before 1 October 2001?
17. Why may I not claim a loss on a personal-use asset such as an ocean-going yacht?
18. From what date will capital gains be taxed?
19. How will my unit trust be valued on 1 October 2001?
20. If an investor were to add monthly to an existing Unit Trust fund for a couple of years after 1 October and then sell all the units how would the loss/gain be calculated?
21. What´s not effected by the CGT?
22. What is base cost?
23. How does the annual exclusion work in respect of a capital gain or capital loss situation?
24. I enter into a long-term lease for a building which I then use as my primary residence. I then sell this right for a R1,5 million profit. Can I claim the R1 million exemption?
25. Who is liable to pay CGT?
26. We have a property in a CC. There are two members that each have a 50/50 share and the two members are in the same sex union from May 1986. The property is being used as a primary residence for domestic purposes since March 1998. Bond expenditure was paid by the members and the size of the property is 2,3 hectares and the municipality value is about R500 000. We would like to know what the effect on CGT would be on us if we would like to transfer the property to our individual names.
27. What if the asset was an inheritance or part of a divorce settlement?
28. What does roll-over mean and what assets disposed of are subject to roll-over relief ?
29. What if an asset was acquired before the valuation date?
30. If I purchased property in a trust, would I qualify for exemption from stamp duty and transfer duty if I transfer the property into my own name?
31. What will the effect of CGT be when calculating deduction for medical, donations and retirement annuity fund contributions?
32. Where are taxable capital gains included in the basic reduction formula?
33. 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 partner be regarded as a capital gain accruing to both partners? In other words, can the capital gain be spread between the two partners as is the case with interest earned? If the answer is "no"
34. Should investments which are likely to incur a capital gain when disposed of (eg. Shares or unit trust) not be transferred to the partner who has the lower marginal tax rate?