CGT Event - or not?

Would there be a CGT Event if you sell your house?

• Yes

• No

Answer explanation

Selling (disposal) of immovable property (asset) for which I have a base cost and proceeds.

But isn't a house a personal use asset?

Would there be a CGT event if someone owes you money and you write off that debt?

• Yes

• No

Answer explanation

If you as the lender waive the debt owed to you, you waive (dispose of) your right to collect that debt (an asset in your hands) from your creditor. You will suffer a capital loss.

See para 56(1) - if the waiver takes place between connected persons as defined, that capital loss must be disregarded. Exceptions in para 56(2).

Will there be a CGT event if you lose a R100 note that was in your back pocket?

• Yes

• No

Answer explanation

Currency is not an asset

Will there be a CGT event if you win the SA lottery?

• Yes

• No

Answer explanation

See para 60 of the 8th Schedule.

As ticket holder you hold a personal right to claim winnings (asset). When you go claim the winnings you dispose of that right in exchange for your winnings.

Generally gambling is excluded from CGT, subject to certain exceptions:

1. Foreign winnings by natural persons;

2. Illegal gambling games & competitions in SA;

3. C/G by companies, trust etc from any gambling.

Would there be a CGT event if a company issues a share to a shareholder?

• Yes

• No

Answer explanation

The issue of shares is a non-disposal event.

Would there be a CGT event if a contract is cancelled within the same year of assessment that it was concluded?

• Yes

• No

Answer explanation

Its a non-disposal event.

Would there be a CGT event if Dunder Mifflin (Pty) Ltd, a SA paper supplier, sold paper to a customer?

• Yes

• No

Answer explanation

Paper is Dunder Mifflin's trading stock, so the sale thereof is included in their gross income and the costs associated with paper procurement is deducted for tax purposes. Therefore, even though there is a disposal of an asset, the proceeds will be nil (due to the inclusion of the receipt in gross income) and the base cost will also be nil (due to the deduction claimed).

Will there be a CGT event if the Mamelodi Sundowns transfer a player's contract to Kaiser Chiefs for a transfer fee?

• Yes

• No

Answer explanation

The player's contract is an asset in the hands of the transferring club.

Sports clubs are generally not in the business of trading player contracts (revenue) so the transfer is capital in nature. See SARS Guide on the Taxation of Professional Sports Clubs and Players.