Assets acquired on or after 1 October 2001

The loss-limiting formula ‘proceeds less post-valuation date expenditure’ will always result in a no gain or loss situation.
 
In order to understand this formula it is necessary to begin with the core base cost formula:
Base cost = valuation date value (VDV) + post-valuation date expenditure
 
A no gain or loss situation arises when:
Base cost = Proceeds.

This can be restated as:
VDV + post-valuation date expenditure = Proceeds

And then rearranged as:
VDV = Proceeds – post-valuation date expenditure

Proceeds
Calculating a capital gain or loss
 
Essentially the ‘proceeds less post-valuation date expenditure’ formula works backwards to arrive at a VDV that will yield neither a gain nor a loss after the post-1 October 2001 expenditure is added to it.
 
Last Updated: 04/08/2014 3:57 PM     print this page
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 Top FAQs

If, after 1 October 2001, an investor were to add monthly to units in a unit trust fund acquired before valuation date and then sell all the units how would the loss/gain be calculated?
Two features of the legislation reduce the record-keeping required of a monthly investor in a unit trust.The weighted average cost method is one of three asset identification

I bought LISTED shares in 1999 for R100 and sold them in 2013 for R70. Their market value on 1 October 2001 was R60. Am I liable for CGT on the R10 (R70 – R60) even though I made an actual loss of R30 (R70 – R100)?
The answer depends on which asset identification method you have adopted. First in, first out or specific identification If you adopted the first-in-first-out or specific identification