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Charlie Golf Tango?!

This is article number five in the series What taxes should my business comply with? In the piece published on 03 April 2018 we listed a range of taxes that you will need to consider when running a business. In this piece we will look at capital gains tax commonly referred to as CGT and how it impacts on the business and shareholders.

As a legal entity with the main aim of generating healthy profits, your business will be party to several transactions in the future which will generate proceeds. Now in terms of the income tax act, not all proceeds are equal. The act broadly classifies proceeds as either income or capital of nature.

Proceeds of income nature are taxed in terms of the rules and provision of the act. Capital proceeds are dealt with by a separate part of the act. The disposal of a capital asset will always result in a proceed of some sort – ideally you would not want to give away assets to third parties and not receive any consideration therefor…

The act has a range of rules which govern the tax calculation you will make to derive a capital gain or a capital loss. Whenever you converse with a tax accountant you will hear them use the following terms:

  • Capital Gain

  • When your consideration received exceeds the base cost of the asset dis