Am I correct in understanding that the valuation of personal assets is at cost price? What about personal assets that you have received as personal gifts/donations over say 10 yrs which in each year was under the annual exclusion rate. These assets have value yet cost is zero as they were given freely & gratis. How will/would SARs see this in an event of an Audit and a Home inspection?
You would need to look at the market value of these assets then on the final day of the tax year you are submitting for.
Jonnosays: 24 November 2015 at 19:14
Answer is incomplete....
You receive 'assets' such as furniture, clothes etc from friends or family as gifts/donations below the annual limit-currently at R100 000-double this as I am married in community of property- ie did not cost you. Personal assets bought by oneself is listed at cost price as far as I know
Now you say SARS says I must place a market value on this and include in my Statement of Assets & Liabilities....I am not saying you are not correct as I am not a tax expert but trying to get my head around this...as I have not factored this in by working on a cost price basis as far as these donated personal assets go- which now appears to be incorrect. How does one rectify this?
How does SARS view or assess this in a case where ones income in light of' basic living expenses' do not allow for this increase in personal assets creating 'red flagging' as not having disclosed all your income...
TaxTimsays: 25 November 2015 at 21:06
If a personal asset was donated to you then this would still have a cost at the date of you receiving this which you could use, however most taxpayers do not keep track of this and therefore would use market value at the date of the tax return being filed. In the case of these types of assets the MV each year actually decreases year on year so this would be to the benefit of the taxpayer. It is very rare for SARS to come do lifestyle audits on taxpayers unless they suspect you of evading taxes based on your actual income not looking 100%. They will not query personal household assets.
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