CGT for a company at the 80% inclusion rate and effective 21.6% rate.
Company CGT
—
Capital gain
—
Included in income
—
Net after CGT
—
Your breakdown
Updates live as you type| Step | Amount |
|---|
There is no capital gains tax, technically
South Africa does not have a standalone capital gains tax with its own rate. Instead, when a company sells an asset for more than it paid, a portion of that gain gets folded into the company's ordinary taxable income and taxed at the normal company rate. The mechanism is the inclusion rate. For a company the inclusion rate this calculator applies is 80 percent, meaning four-fifths of the gain becomes taxable income, and that slice is then taxed at the 27 percent company rate. Multiply those together and you get an effective rate of about 21.6 percent on the whole gain. This tool is built for company directors and accountants pricing the after-tax proceeds of selling business assets, shares, or property held in a company.
Both percentages, the 80 percent inclusion and the 27 percent company rate, are the figures this calculator applies, and both deserve a check against the SARS capital gains tax material before you rely on them for a real disposal. The structure, gain times inclusion rate times company rate, is the part that stays put.
A R2 million sale of a R1.2 million asset
Picture a company selling an asset for R2,000,000 that it bought for R1,200,000. The base cost is what it paid plus qualifying improvements and costs, and the gain is proceeds less base cost. Here is the flow using the rates this calculator applies.
The CGT works out to R172,800, which is 21.6 percent of the R800,000 gain, leaving R627,200 of the gain after tax. The chart below shows the gain split into the taxed and retained portions.
Why companies pay more than individuals on the same gain
An individual selling the same asset would fare better, and the reason is twofold. First, an individual gets an annual capital gains exclusion, currently R40,000 a year as modelled here, which a company does not get at all. Second, an individual uses the lower 40 percent inclusion rate rather than the company's 80 percent. That is why the maximum effective rate for an individual sits near 18 percent while a company lands at about 21.6 percent. A common mistake is to assume an asset is better held in a company for tax reasons; for a long-term growth asset that will be sold, the company often carries the heavier capital gains burden, and there is no annual exclusion to soften it. There is also a separate small business asset relief of up to R1.8 million in some owner disposals, which this corporate tool does not model.
Does the company get the R40,000 annual exclusion?
No. The annual capital gains exclusion is for individuals and special trusts only. A company includes the full gain at the 80 percent inclusion rate this calculator applies, with no first slice taken off, which is one reason corporate CGT lands higher than the individual equivalent.
What counts toward the base cost I subtract?
Base cost is generally the original purchase price plus the costs of acquiring and improving the asset, such as transfer costs, legal fees, and capital improvements, but not repairs or running costs. A higher base cost means a smaller gain and less tax, so keeping records of improvement spend matters. Confirm the qualifying items against the SARS capital gains tax guide.
Is a capital loss any use to the company?
Yes, but only against capital gains. A capital loss cannot reduce the company's ordinary trading income; it is ring-fenced and carried forward to offset future capital gains. This calculator floors the gain at zero, so a loss simply shows no CGT rather than a refund against other profit.