Category: Eighth Schedule – Determination of taxable capital gains and assessed capital losses

EIGHTH SCHEDULE

 

Eighth Schedule inserted by section 38 of Act 5 of 2001.

Paragraph 4 (Eighth Schedule) – Capital loss

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4.     Capital loss

A person’s capital loss for a year of assessment in respect of the disposal of an asset-

(a)     during that year, is equal to the amount by which the base cost of that asset exceeds the proceeds received or accrued in respect of that disposal;

[Subparagraph (a) substituted by section 68 of Act 60 of 2001 and section. 65 of Act 74 of 2002 and amended by section 104 of Act 25 of 2015 effective on 1 January 2016]

(b)     in a previous year of assessment, other than a disposal contemplated in subparagraph (c), is equal to-

[Words preceding item (i) substituted by section 104 of Act 25 of 2015 effective on 1 January 2016]

(i)      so much of the proceeds received or accrued in respect of the disposal of that asset that have been taken into account during any year in determining the capital gain or capital loss in respect of that disposal-

(aa)   as that person is no longer entitled to as a result of the cancellation, termination or variation of any agreement, or due to the prescription or waiver of a claim or a release from an obligation or any other event during the current year of assessment;

(bb)   as has become irrecoverable during the current year of assessment; or

(cc)    as has been repaid or has become repayable during the current year of assessment;

and which have not been taken into account in the redetermination of the capital gain or capital loss in terms of paragraph 25(2);

(ii)     so much of any expenditure incurred during the current year of assessment in respect of that asset, which is allowable in terms of paragraph 20 and that has not been taken into account –

(aa)    during any year in determining the capital gain or capital loss in respect of that disposal; or

(bb)   in the redetermination of the capital gain or capital loss in terms of paragraph 25(2); or

(iii)    the sum of-

(aa)   any capital loss redetermined in terms of paragraph 25(2) in the current year of assessment in respect of that disposal; and

(bb)   any capital gain (if any) determined in respect of that disposal in terms of paragraph 25 for the last year of assessment during which that paragraph applied in respect of that disposal; or

[Subitem (bb) amended by section 104 of Act 25 of 2015 effective on 1 January 2016]

(c)     in a previous year of assessment that has been reacquired as contemplated in paragraph 20(4), is equal to any capital gain determined in respect of that disposal.

[Subparagraph (c) added by section 104 of Act 25 of 2015 effective on 1 January 2016]

Paragraph 6 (Eighth Schedule) – Aggregate capital gain

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6.    Aggregate capital gain

A person’s aggregate capital gain for a year of assessment is the amount by which the sum of that person’s capital gains for that year and any other capital gains which are required to be taken into account in the determination of that person’s aggregate capital gain or aggregate capital loss for that year, exceeds the sum of-

(a)     that person’s capital losses for that year; and

(b)     in the case of a natural person or a special trust, that person’s or special trust’s annual exclusion for that year.

Paragraph 7 (Eighth Schedule) – Aggregate capital loss

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7.     Aggregate capital loss

 

A person’s aggregate capital loss for a year of assessment is the amount by which the sum of a person’s capital losses for the year exceeds the sum of-

 

(a)     that person’s capital gains for that year and any other capital gains which are required to be taken into account in the determination of that person’s aggregate capital gain or aggregate capital loss for that year; and

 

(b)     in the case of a natural person or a special trust, that person’s or special trust’s annual exclusion for that year.

Paragraph 14 (Eighth Schedule) – Disposal by spouse married in community of property

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14.     Disposal by spouse married in community of property

 

For the purposes of this Schedule, in the case of spouses married in community of property, where any asset is disposed of by one of the spouses and that asset-

 

(a)     falls within the joint estate of the spouses, that disposal is treated as having been made in equal shares by each spouse; and

 

(b)     was excluded from the joint estate of the spouses,

 

that disposal is treated as having been made solely by the spouse making the disposal.

Paragraph 25 (Eighth Schedule) – Determination of base cost of pre-valuation date assets

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25.     Determination of base cost of pre-valuation date assets

 

(1)     The base cost of a pre-valuation date asset (other than an identical asset in respect of which paragraph 32(3A) has been applied), is the sum of the valuation date value of that asset, as determined in terms of paragraph 26, 27 or 28, and the expenditure allowable in terms of paragraph 20 incurred on or after the valuation date in respect of that asset.

 

(2)     If a person has determined the base cost as contemplated in subparagraph (1) of a pre-valuation date asset which was disposed of during any prior year of assessment and in the current year of assessment-

 

(a)     any amount of proceeds is received or accrued in respect of that disposal which has not been taken into account in any prior year in determining the capital gain or capital loss in respect of that disposal;

 

(b)     any amount of proceeds which was taken into account in determining the capital gain or capital loss in respect of that disposal has become irrecoverable, or has become repayable or that person is no longer entitled to those proceeds as a result of the cancellation, termination or variation of any agreement or due to the prescription or waiver of a claim or a release from an obligation or any other event during the current year;

 

(c)     any amount of expenditure is incurred which forms part of the base cost of that asset which has not been taken into account in any prior year in determining the capital gain or loss in respect of that disposal; or

 

(d)     any amount of base cost of that asset that has been taken into account in any prior year in determining the capital gain or capital loss in respect of that disposal, has been recovered or recouped,

 

that person must redetermine the base cost of that asset in terms of subparagraph (1) and the capital gain or capital loss from the disposal of that asset, having regard to the full amount of the proceeds and base cost so redetermined.

 

(3)     The amount of capital gain or capital loss redetermined in the current year of assessment in terms of subparagraph (2), must be taken into account in determining any capital gain or capital loss from that disposal in that current year, as contemplated in paragraph 3(b)(iii) or 4(b)(iii).