Corporate CGT rate soars
02 October 2012
Posted by: SAIT Technical
By Michael Stein (Friday Page)
Costa Divaris, writing in the Tax Shock Horror newsletter (August 2012), makes the point that the effective corporate cgt rate has soared.
He notes that the corporate rate of CGT has, with effect from the 2013 year of assessment, gone up from 14% to 18,65% (28% of 66,6% of R100), an incredible 33% increase. There is R81,35 (R100 – R18,65) left to distribute as a cash dividend. On this, he says, you pay the withholding tax of R12,20 (15% of R81,35) when no exemption is applicable, making a total tax bill of R30,85 (R18,65 + R12,20). The effective rate on corporate capital gains extracted from a company has thus gone up from 21,82% to 30,85%, a totally unbelievable 41,38% increase!
These changes are contained in the Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Bill, which is yet to be promulgated as an Act.