CGT became effective on 1 October 2001 and South African residents are liable for the payment of Capital Gains Tax (CGT) on the disposal of any asset from that date, subject to certain limited exceptions. Non-residents, however, are only liable to pay CGT on the disposal of the following:
- Immovable property situated in SA including any right or interest in immovable property,
- Assets of a permanent establishment of a non-resident through which trade is carried on in SA
CGT is payable in the year in which the asset is disposed of and is calculated by adding 25% of the capital gain, or profit, to the individuals income for that year and taxing that income at the individuals marginal rate of income tax.
- The maximum marginal income tax rate for individuals in SA is presently 40% (reached at taxable income levels of R580 000 and above). Therefore you would pay a maximum of 10% of the capital gain.
- The capital gain is calculated and disclosed in the individuals income tax return for the year in which it is sold. Therefore, if a non-resident doisposes of an immovable property in any year of assesssment and is not a registered tax payer, they will have to register as a South African tax payer.
- South African residents to not pay CGT on the first R1,5 million of profit made on the sale of their primary residence, however, non-residents do not qualify for this exemption.