WHAT IS CAPITAL GAINS TAX?

Capital Gains Tax (CGT) exists countries such as the United States of American, the United Kingdom, Canada and Australia. On 1 October 2001, CGT was introduced in South Africa, bringing our country in line with international practice. CGT is basically a tax (government charge) you pay on the profits made from the resale of assets. You are liable for payment when you sell, or otherwise dispose of certain assets. All taxpayers including individuals, trusts, companies and close corporations are taxed on the profit made from selling assets (or property of a capital nature, i.e. equipment with which goods and services are produced, like tools, machinery, buildings and so on).
CGT helps to widen the tax net, which should help reduce personal income tax.

What are the Exclusions?

Capital gains and losses on the disposal of specified assets are excluded from CGT. Some of the important exclusions include the following:

• Personal-use assets, which include personal belongings such as a motor vehicle (including a motor vehicle for which you receive a car allowance), a caravan, artwork, stamp collection, furniture and household appliances and other assets used mainly (that is, more than 50%) for a non-trade purpose
• The primary residence exclusion - most primary residences will not be subject to CGT because the first R2 million of any capital gain or loss on the sale is disregarded for CGT purposes. This means that you need to make a capital gain of more than R2 million in order to be subject to CGT.

THE FINANCIAL INTELLIGENCE CENTRE ACT, 38 OF 2011

As a primary accountable institution in terms of the Act, we have to establish and verify the identity of all our clients. We will require a certified copy of clients identity documents and proof of clients’ residential address (i.e.: copy of water and lights account) and income tax number.

THE OCCUPATIONAL HEALTH AND SAFETY ACT 85 OF 1993 REGULATION 12 OF THE ELECTRICAL MACHINERY REGULATIONS

A certificate of Compliance in respect of the electrical and electric fence installation is required in respect of the property. The seller is required to furnish this at his cost, and also to pay for any repairs necessary for the certificate to be issued. These certificates are valid for 24 months.

THE OCCUPATIONAL HEALTH AND SAFETY ACT 85 OF 1993 REGULATION 17(3) OF THE PRESSURE EQUIPMENT REGULATIONS

A Certificate of Conformity for Gas Appliances, also known as a gas compliance certificate, is a certificate issued by an authorised person registered to issue such certificate in terms of the regulations. The certificate warrants that any gas appliances present on the property are safe according to the applicable standards. Such a certificate must be obtained and paid for by the seller whenever a gas appliance is installed, altered or modified and, most importantly, upon any change of ownership of the property.

ATTORNEYS’ FUNCTIONS IN THE TRANSFER PROCESS

TRANSFERRING ATTORNEYS
Attorney’s Functions		Who do they represent?		Who appoints them?
They transfer the property from the seller to the buyer		The seller		The seller
REGISTERING (OR BOND) ATTORNEYS
Attorney’s Functions		Who do they represent?		Who appoints them?
They register the bond over the property in favour of the bank that is financing the purchase of the property		The bank granting the buyer’s home loan		The bank granting the buyer’s home loan
CANCELLING ATTORNEYS
Attorney’s Functions		Who do they represent?		Who appoints them?
They cancel the seller’s existing home loan on the property		The bank cancelling the seller’s home loan		The bank cancelling the seller’s home loan