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A Fin24 user wants to know how the capital gains tax on his Satrix investment works. He writes:
I invested a large amount of money I got from my father into a balanced fund with Satrix. How will the tax work on the gains?Lets say I make R100k for the year. Will that R100k go together with my normal salary income and then a percentage will be calculated on what I must pay on my income or do I just pay a capital gains tax on the R100k.
And what will the capital gains percentage be?
Erich Bell of the South African Institute of Tax Professionals responds:
We assume the R100k (R100 000) that you made on disposal of the Satrix interest is over and above the R100k you paid for the investment. Assuming you held the investment on capital account, the capital gain would be the proceeds of R200 000 less the base cost of R100 000 (plus fees paid for acquiring or selling the interest per paragraph 20 of the Eighth Schedule to the Income Tax Act).
That gain will then be included with all your other capital gains and losses for the year less the annual exclusion of R30 000, and then any assessed capital loss from the previous year will be deducted from the amount. Of the amount remaining 33.33% will be included in your taxable income in terms of section 26A of the Income Tax Act.
If we assume you had no other costs or capital losses, then the effective tax rate, if the marginal tax rate of 40% applies, is approximately 9.3% of the R100k capital gain made or a maximum of approximately R9 324 in normal tax payable on the gain prior to rebates ((R200k-R100k) - R30k x 33.3% x 40%).
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