BREAKING NEWS: Budget amendments directly affecting you by 29th February 2016
Yesterday’ s Budget Speech included an increase in Capital Gain’s Tax rates for individuals from 33.3% to 40% and companies (years of assessment commencing 1 March 2016) and trusts from 66.6% to 80%, meaning that from 1 March 2016 an individual’s effective CGT payable has increased by 2.75%, companies (years of assessment commencing 1 March 2016) by 3.75% and trusts by 5.5% where the profits are not distributed to the individuals. Therefore, if you are intending to sell any of your personal or your Trust’s investments or any assets in any of your entities with February year ends within the short term, it may make sense to finalise the transaction before 29th February 2016.
However, importantly, it will mean that the CGT on the sale will need to be paid by 29th February as part of the 2nd provisional tax payment for 2016 if your taxable income is more than R1m, else if the Capital Gain and the balance of your taxable income are still less than R1m, the payment would be unaffected as we would have based the payment on the last assessed taxable income. The CGT would then still only be due in September as part of the topping up payment.
So it would also be a cash flow consideration as it is highly likely that the CGT would be paid before the proceeds are received on the investments or assets.
Please contact Juanita Roman or your partner urgently to discuss how you would like to proceed as we would need to make the necessary amendments to your provisional tax payments due by Monday.