PKF uses cookies to enhance your browsing experience and analyse site traffic. By continuing to browse our site, you consent to the use of cookies. For more information, please refer to our Privacy Policy

Home News Tax Capital Gains Tax: At what point in time is it triggered?

Have a question?

2022 Tax News • 2022-04-26

Capital Gains Tax: At what point in time is it triggered?

Capital Gains Tax

Mr. S concludes an agreement to sell fixed property (“Property S”) to Mr. P on 20 January 2021, subject to Mr. P concluding an unconditional agreement of sale to sell his own fixed property (“Property P”) by 20 February 2021. Mr P concludes an unconditional agreement for the sale of Property P on 2 February 2021. The Deeds Office registers the transfer of Property S on 20 May 2021.

At what point in time does Mr. S trigger capital gains tax? The importance and detailed consideration of this question is at times overlooked – with potentially drastic implications for Mr. S (or any other taxpayer realising a capital gain on the sale of property).

To take a step back - capital gains tax may be triggered in respect of the disposal of assets in the event that the proceeds realised by the seller exceeds the base cost of such asset in the hands of the seller. The Eighth Schedule of the Income Tax Act No. 58 of 1962 contains rules which stipulate the time of a disposal for capital gains tax purposes – which is therefore the time at which capital gains tax is triggered.

Click here to download

No information provided herein may in any way be construed as legal and/or tax advice. Professional advice should be sought with reference to specific background facts before any action is taken based on the information contained herein. We hereby disclaim any responsibility should any person act upon the contents of this publication without due consultation.

PKF South Africa Inc. is a member firm of the PKF International Limited family of legally independent firms and does not accept any responsibility or liability for the actions or inactions of any individual member or correspondent firm or firms.

See more 2022 Tax News items