What is Capital Gains Tax (CGT)?
Definition
Capital gains tax is a tax on the profit made when selling a capital asset such as property, shares, or a business in South Africa.
Explained Simply
In South Africa, CGT is not a separate tax — it forms part of income tax. Only a portion of the gain is included in taxable income: 40% for individuals, 80% for companies. Individuals get an annual exclusion of R40,000 and a lifetime exclusion of R2 million on the sale of a primary residence. The effective CGT rate for individuals ranges from 7.2% to 18%, depending on their marginal tax rate. Losses can be carried forward to offset future gains.
Related Terms
Income Tax
Income tax is a direct tax levied by SARS on the taxable income of individuals, companies, and trusts in South Africa, using a progressive rate system for individuals.
Taxable Income
Taxable income is the portion of total income on which income tax is calculated, after subtracting all allowable deductions and exemptions as defined by SARS.
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