CAPITAL GAIN ARISING FROM RECEIPT OR ACCRUAL OF FURTHER PROCEEDS

Example – Proceeds accruing following disposal of asset

Facts:
Magdelene acquired business premises on 1 October 2001 at a cost of R1 000 000.
On 29 February 2012 she sold the property to Kayzita on the following terms:
  •  R1 200 000 payable on 29 February 2012.
  • The following amounts payable, each on condition that the net rental return exceeds 10% in the relevant year: R100 000 (2013), R110 000 (2014), R120 000 (2015), R130 000 (2016).
Result:
​ ​Proceeds ​2012 2013 2014 2015 2016 Total​
​R 1 200 000 ​R 100 000 R 110 000​ R 120 000​ R 130 000​ R 1 660 000​
Less: Base cost (1 000 000) - - - - (1 000 000)
Capital gain 200 000 100 000 110 000 120 000 130 000 660 000