Capital the rate of 10%. CGT will only occur

Capital Gain Tax introduced by the New Act?

 

 

Capital Gains Tax or CGT is a type of tax
which is imposed on the profit from a sale of property or an investment.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

 

Land, buildings, machineries, inventory,
bonds and cash deposits are considered as capital. A person’s capital includes
real estate that has a cash value and financial assets, such as bank deposits.

 

Capital gain

 

Any gain that occurs from the sale of a capital
asset is a capital gain. This gain is charged to tax in the year in which the
transfer of the capital asset takes place.

 

Capital Gain Tax introduced by the New Act?

 

 

CGT will be charged on the gain arising from
realization of an investment asset at the rate of 10%. CGT will only occur if
the net cost of the asset accumulates a gain to the owner of the asset.

 

New Inland Revenue Act describes how the
capital gain is arisen and when it becomes liable to tax.

 

The new act provides that the capital gain
will be the result of sale price less the price of purchase.

 

In addition, costs on advertising, transfer
taxes, stamp duties, charges imposed by local authorities will be permitted to
be deducted from the capital gain. The net difference between the sale price
and purchase price will be treated as net capital gain.

 

New Act informs that the cost of the asset
includes the expenditure incurred in acquiring the asset such as construction,
manufacture or production of the asset and expenditure on altering, improving,
maintaining or repairing the asset will be allowed to deduct from the price of
purchase

 

But according to the draft new Inland Revenue
Act bill, the tax will only apply to Real Estate gains

 

Reason for implementing CGT

 

The primary reason of implementing CGT is
that the government’s spending on infrastructure has massively helped raise the
prices of real estate property and therefore it is appropriate for the
government to also benefit off of such transactions.

 

 

x

Hi!
I'm Josephine!

Would you like to get a custom essay? How about receiving a customized one?

Check it out