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A Fin24 user has a question about how to interpret the exclusion allowed on capital gains tax. He writes:
Please can you advise if the annual exclusion of R30 000 on capital gains is per year that one has held the stock for or is it R30 000 for the year in which you dispose of the stock?
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Pieter-Jan Bestbier, a director of auditing firm LDP, responds:
Although capital gains or losses, in respect of most personal-use assets are excluded from the capital gains tax (CGT) system, a threshold (annual exclusion) is provided to exclude the total of smaller gains and losses from CGT.
The purpose of the annual exclusion is to reduce compliance costs, and simplify the administration of the tax by keeping small gains and losses out of the system.
READ: Capital gains tax exemption on primary property
The annual exclusion is applied per year of assessment and the exclusion will, therefore, only be utilised in the year in which the asset is sold.
If a taxpayer, for example, had shares for a number of years and sells these in the 2015 tax year, he or she will only be able to utilise the R30 000 exclusion for the 2015 tax year.
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