The South African Revenue Service (SARS) would like to warn taxpayers that inflating valuations in terms of the Income Tax Act, 1962, could result in additional taxes of up to 200% of the tax evaded and criminal prosecution.
While SARS confirms that it has not prescribed who should do valuations for the purposes of determining a capital gain or loss, valuations must be accurate, backed by supporting evidence, and able to withstand scrutiny.
Taxpayers must complete and sign the CGT2 valuation form by 30 September 2004. If the valuation was done by another person, that person must also sign the form. The form does not need to be submitted to SARS immediately. In most cases it must be submitted with the tax return for the tax year in which the asset was disposed of.
Taxpayers will need to submit the CGT2 valuation form with their first tax return submitted after the September 2004 deadline. However, there are some instances where taxpayers must submit the GCT2 valuation forms with their first tax returns after the 30 September 2004 deadline. The submission of the form may be required whether or not the asset was sold. These are:
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 also like to remind taxpayers that the market value for local listed financial instruments (shares, warrants, agricultural and financial futures) and unit trusts as at 1 October 2001 was published by SARS in the Government Gazette.
These values are available from the CGT - Information section of the SARS website at www.sars.gov.za.
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
PRETORIA