5 - Capital Gains Tax

LEADER IN NURTURING CHARTERED ACCOUNTANTS
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www.caa.ac.zw Prepared By: Zvino L Mapetere CA(Z)
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CAPITAL GAINS TAX

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LEARNING OUTCOMES
• To define what capital gains tax is
• To define specified assets (Section 2).
• To understand when and how Capital Gains Tax is
calculated
• To identify instances of deemed disposals.
• To identify disposals, entities and individuals exempt
from capital gains tax.
• To identify the allowable deductions in the
calculation of the taxable gain.
• To identify specific reliefs available to a tax payer on
disposal of a specified asset.
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CAPITAL GAINS TAX
When is capital Gains Tax levied?
▪ Levied on:
- capital gain arising from;
- sale of specified asset.
• What is the significance of a disposal in a CGT
transaction? Can there be CGT consequences
without a disposal occurring?
• When can a disposal be deemed to have
occurred? (sect 10 (1) and(2) of the Taxes Act)
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DEFINING SPECIFIED ASSETS (Sect 2)
What is a specified asset? (sect 2)
- Immovable Property; or
- Any Marketable security
What is a marketable security?
- Any bond capable of being sold in a share market or exchange.
- Any debenture, share or stock; or
- Right possessed by reason of a person’s participation in any unit trust;
Whether or not capable of being sold in a share market or exchange;
• Are listed and non-listed shares both marketable securities?
Why or why not?

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Capital Gain
Capital Gain = Gross capital Amount –

Exemptions – allowable deductions

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DEFINING THE GROSS CAPITAL AMOUNT
Sect 8 (1)(a)
• Total amount received; (or deemed received)
• By a person;
• In any year of assessment;
• From a source within Zimbabwe
• From the sale
• Of specified assets;
• Excluding amounts proved by the taxpayer to constitute gross
income
• Includes amounts allowed to be deducted in terms of
sect11(2)

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Sale
DEEMED SALES (Sect 8(2))
• How else could one dispose of assets other
than by way of sale?
• What is to sell? What is the significance of a
consideration and its form in a sale?
- Expropriations
- Sale in execution of court order
- Maturity or redemption of a specified asset

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IDENTIFYING DISPOSALS, ENTITIES AND INDIVIDUALS
EXEMPT FROM CAPITAL GAINS TAX. (Sect 10)
- Who shall be exempted from Capital Gains

Taxes?
- Which type of disposals shall be exempted?

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IDENTIFYING THE DEDUCTIONS THAT ARE
ALLOWABLE IN DETERMINING A CAPITAL GAIN
(Sect 11)
• What would be allowable as a deduction and

why?
• The cost of the asset and any improvements at
what value? (Sect 11(2)(a)(b))
• Why Inflation allowances? (Sect 11(2)(c))
• Selling expenses, bad debts, High and
supreme court appeal costs
• Assessed capital losses brought forward
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DAMAGED SPECIFIED ASSETS (Sect 13)
• Are the compensation proceeds deemed to be a sale

proceeds always?
• Why is it that in some cases capital gains are not
calculated on the insurance proceeds?

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POSTPONEMENT AND RELIEFS (Sect 15 & 16
&17 )
• When would a taxpayer be allowed to

postpone the computation of capital gains tax
and until when?
• The concept of companies under same control
and marriage.
• The election to postpone and mechanism.
• How is a postponement different from a
relief? In what circumstances do we computes
a relief?
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SUSPENSIVE SALES (Sect 18)
• How are suspensive sales an exception to

section 8 principles?
• Suspensive sales and the due and payable
concept vs accrual concept.
• How to effect a relief and the treatment of a
relief granted in the subsequent tax year.

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PRINCIPAL PRIVATE RESIDENCES AND
SUBSTITUTION OF BUSINESS PROPERTIES (Sect
21 &22)
• What is a principal private residence (PPR)?

• What special tax treatment do PPR transactions get?
- Postponement of capital gains tax
- Taxable portion of PPR proceeds.

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QUESTIONS ?

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TUTORIAL AND HOMEWORK
• Tutorial 19
• Homework Question

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Contact Details
Zvino Mapetere
[email protected]
Ackson Mapfundematsva
[email protected]
Fungai Charumbira
[email protected]

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LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

Capital Gain = Gross capital Amount –

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

- Who shall be exempted from Capital Gains

LEADER IN NURTURING CHARTERED ACCOUNTANTS

• What would be allowable as a deduction and

• Are the compensation proceeds deemed to be a sale

LEADER IN NURTURING CHARTERED ACCOUNTANTS

• When would a taxpayer be allowed to

• How are suspensive sales an exception to

LEADER IN NURTURING CHARTERED ACCOUNTANTS

• What is a principal private residence (PPR)?

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

LEADER IN NURTURING CHARTERED ACCOUNTANTS

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