October, the month investors fear the most because of its historical link with financial market woes, will have an added spectre this year - the introduction of Capital Gains Tax (CGT) in South Africa.
According to Deloitte & Touche Taxation Services` associate director, Peter Harrison there is no need for taxpayers to panic at the thought of CGT.
"At present there is a feeling that the door will close on everyone come 1 October and that the consequences will be disastrous. This is not the case, although it is important that companies and individuals begin to put their affairs in order," he says.
According to Harrison, CGT is a tax on realised gains. The gain is the difference between the proceeds on disposal of an asset and its "base cost".
For assets already owned on 1 October 2001, however, the law provides the taxpayer with the option of using the valuation at 1 October 2001 as the base cost instead of the historic cost.
"While such a valuation may seems pretty straight forward, there are many aspects surrounding how a valuation needs to be done, who may do it and when it must be done, that need to be considered individually," explains Harrison.
SARS has put in place a number of anti-avoidance measures which deny capital losses from being allowed, particularly in relation to intellectual property such as trademarks, licenses and so on, he says.
Taxpayers holding assets via an intermediate company could be hard hit by CGT and SARS acknowledges the law has not been tailored to deal with these issues.
Concludes Harrison: "Deloitte & Touche are experts on the current legislation. Significant changes are still being made to the law and we`ll be happy to guide and assist taxpayers wishing to undertake any activity that will take them into the realm of CGT. In addition, it is important to note that our current CGT framework is a basic model and as we move forward it will definitely evolve into a more comprehensive - and possibly complex - tax system."
Deloitte & Touche will be hosting workshops to help you and your company through the CGT maze and answer your questions.
Cape Town: Tuesday 25 September
Durban: Wednesday 26 September
Pretoria: Thursday 27 September
Port Elizabeth: Friday 28 September
Johannesburg: Tuesday 2 October
Nelspruit: Wednesday 3 October
For more information please contact (011) 806 5398 or visit http://www.deloitte.co.za or http://www.zafinance.com/deloitte/default.htm to register online.
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