The South African Revenue Service (SARS) has issued a revised version of its Comprehensive Guide to Capital Gains Tax (CGT). This update includes various changes since the guide was last published in 2011.
As before the guide looks at what should be taxed as either income or capital and reflects the tax code as at December 12, 2013. The guide gives close attention to the distinction between income and capital with reference to case law and giving examples of both types of income. This is important because of the lower rate of tax attributable to capital gains as compared to income tax. Also under South African tax law losses of a revenue nature can usually be set off against both income and capital gains but capital losses may only be set off against capital gains. Taxpayers therefore need to be clear about the difference between income and capital and the tax administration looks carefully at any attempt to categorize income as capital.
The updated version of the guide has been published by SARS as a draft and comments from interested parties are invited by May 31, 2015.
