The South African Revenue Service (SARS) would like to remind taxpayers of the approaching 30 September 2004 deadline for the valuation of assets for Capital Gains Tax purposes.
In terms of the Eighth Schedule of the Income Tax Act, taxpayers may value certain assets held on 1 October 2001 for the purpose of determining a capital gain or loss on disposal of those assets.
The Act also details core steps that need to be followed in determining a gain to be included in taxable income or an assessed capital loss to be carried forward to a subsequent year of assessment.
SARS would like to encourage all those who have not yet valued their assets to consider whether it would be appropriate to do so as a matter of urgency.
A capital gain or loss is determined by deducting the base cost from the proceeds on disposal of an asset. The base cost of assets acquired on or after 1 October 2001 is the actual expenditure incurred and paid in respect thereof.
In the case of assets acquired before1 October 2001, three methods for determining the base cost are available, namely :-
The market value method is only open to those taxpayers who value their assets by 30 September 2004 and who complete a valuation form by that date. By valuing their assets by the deadline date taxpayers will retain the option to use this method, which may or may not reduce their CGT exposure.
SARS has provided a form CGT2 which contains the minimum information to be supplied in relation to the valuation of an asset. The valuation form must be signed by the taxpayer, and if the valuation is done by another person, the valuer also needs to sign the form.
The form is available on the SARS website - www.sars.gov.za. A copy of this form must be lodged with the taxpayer's tax return for the year in which the asset is disposed of.
In the following circumstances the valuation form must be lodged with the first tax return submitted after 30 September 2004, regardless of whether or not the asset has been disposed of. The market value on 01 October 2001:
SARS does not prescribe who may value an asset. All documents substantiating the valuation and how it was arrived at should be kept by the taxpayer as SARS may call for them.
For more information please contact Sechaba Nkosi at (012) 422 5046 or 082 465 2901.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE