Kapitaalwinsbelasting en die toekomstige implementering daarvan in Suid-Afrika

Abstract

CAPITAL GAINS TAX AND THE FUTURE IMPLEMENTATION THEREOF IN SOUTH AFRICA No definition of a capital gain is contained in the Income Tax Law. The intention of the taxpayer is conclusive in determining whether a profit is of a capital nature and therefore, presently, free of tax. The institution of a capital gains tax in South Africa has already often been examined by various commissions and, although some have recommended the institution thereof and in 979 draft legislation had even been prepared, it has never been carried through. I am of the opinion that a capital gains tax will probably be instituted in South Africa at a later stage so as to broaden the tax base and to ensure greater equity between taxpayers. The legislation concerning capital gains tax as presently applied in the United Kingdom has been used as a basis for discussion of the characteristics of the tax in overseas countries. Flowing from this recommendations are made regarding the features that the tax should encompass in South Africa. There are different approaches regarding the rate at which the tax must be levied and the recommendation is that individuals and trusts should be taxed at the lower of the average tax rate for the present year on normal tax or 30% , whilst companies should be taxed at a flat rate of 30%. Certain assets such as a private dwelling and motor vehicles should, subject to certain prescribed rules, not be subject to capital gains tax whilst there should be relief in the form of indexing and roll-over on specific other assets. The arguments for and against the institution of such a tax is discussed and the conclusion drawn that the low contribution of such a tax might possibly not measure up to the administrative burden resulting therefrom. Should a capital gains tax, however, be instituted in South Africa it must comply with all the requirements of good, equitable and fair taxation.