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Provisional Tax form completion for declaring Capital Gains

Posted 17 August 2013

I've cashed out my investment portfolio in May this year, in preparation for emigration, which will be completed in September this year. So I need to fill out a provisional tax declaration for capital gains, which comes to around R75k. I also haven't been in South Africa for the entire year - we moved overseas before the tax year started. So I haven't earned any income in South Africa to declare.

In the provisional tax income form, I fill out the R75k as "Gross/turn over", and have calculated the taxable income as R14k (R75k - R30k excluded amount for capital gains per year x 33.3% inclusion rate).

That gives me a tax amount of R2500, and the provisional tax form starts throwing warnings about that seeming to be a low amount etc.

My question is - in the "Estimated taxable income" section, am I supposed to put the full R75k of capital gains as "income", or am I supposed to do the calculation for the actual taxable amount of capital gains, ie R14k?

TaxTim TaxTim says:
19 August 2013 at 23:06

For now you would include only the portion that is actually included in income to be taxable so this would be the R14 000 as you say. So the capital gain less the exemption x the inclusion rate.

The form will warn you of this as the law states that provisional tax (income portion) cannot be less than 90% of the previous year, however this can be changed on proper motivation to SARS if they request it so you can go ahead and include this. How did you come up with R2 500 if you have no other income at all? Your actual taxable income is below the threshold.

Turnover sits above the Capital Gains Inclusion so you would actually put zero there and R14 000 under Taxable Income. It should give you a result of 0.

Marz says:
20 August 2013 at 7:24

I am actually residing overseas, so earning income in another country. I'm not even sure if I need to declare that income as well somewhere? I've just sold some investments in South Africa, hence the capital gains declaration.

Thanks!

TaxTim TaxTim says:
20 August 2013 at 9:47

Income earned from a South African source is declarable in South Africa and subject to tax, if above the threshold. So you would need to declare and complete the IRP6.

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