It is recognised that the tragic events, which occurred on 11 September in New York, introduced a new set of economic implications into the world markets. These events certainly had a substantial negative impact on stock markets world wide and, therefore, also on the South African stock exchange.
There are also possible implications for Capital Gains Tax.
Recent fluctuations in the quoted prices will certainly have implications on capital gains tax valuations and will ultimately influence the gain or loss which will arise on disposal of these instruments after 1 October 2001. Numerous organisations have drawn our attention to these events and the implications thereof. SARS and the Minister of Finance are, therefore, acutely aware of these concerns raised.
SARS will continue the process of determining the average market prices for purposes of financial instruments listed on a local exchange and publish it on the SARS website over the coming weekend.
We will, however, consult with interested parties over the next few weeks and SARS will also carefully monitor the market trends over the weeks to come in order to determine whether appropriate corrective measures should be introduced to ensure that the valuation date values for these types of instruments reflect a realistic and appropriate open market value.
However, CGT will be implemented on 1 October 2001 as planned.
NB: Capital gains tax will be introduced as from 1 October 2001 and taxpayers have the option to use as the opening base cost of any financial instrument quoted on a recognised exchange, either the market value of that financial instrument quoted on that exchange or the time-apportionment base cost of that financial instrument which is based on the actual cost of the instrument. The opening base cost value is used in order to determine the portion of capital gain or loss that relates to the period after the introduction of capital gains tax. The market value for financial instruments, which are listed on an exchange, will be based on, or determined with reference to, the market price quoted on the relevant exchange.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE
PRETORIA