The South African Revenue Service (SARS) would like to remind the public that the completion of the valuation form (CGT 2) for purposes of Capital Gains Tax (CGT) is compulsory for taxpayers wishing to use the market value method in determining the base cost of assets they held on 1 October 2001.
The valuation form CGT 2 must be completed, signed and dated by the taxpayer before* 30 September 2004.
There have been questions asked as to when the valuation form must be submitted. The submission is dependent on:
The general rule is that the valuation form must be submitted with the tax return in which the disposal is reflected. For example, if the asset is sold on 30 June 2005, the disposal will be reflected in the 2006 tax return (covering the year ended 28 February 2006). The CGT 2 form must be submitted with that return.
The form and any supporting documents must simply be retained in a safe place until the asset is disposed of.
However, only in the case of the high value assets listed below must the valuation form be submitted with the first tax return lodged after 30 September 2004:
In other words, the form must be submitted even though the asset may not have been disposed of. Failure to comply with this requirement will result in the taxpayer not being permitted to use the valuation.
In all instances, only the valuation form CGT 2 must be submitted with the relevant tax return. The valuation itself and any supporting documents must be kept in a safe place should SARS call for it (for example, during an audit). And as is the case with most other tax forms, taxpayers are advised to keep a copy of the valuation form submitted for their own records.
SARS would like to remind taxpayers that inflating the valuations or submitting untruthful information could lead to additional taxes of up to 200% of the tax evaded and criminal prosecution in terms of the Income Tax Act, 1962.
For more information please visit www.sars.gov.za and click on the CGT icon or contact Sechaba Nkosi at (012) 422 5046 or 082 465 2901.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE