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FAQs: Exempt Institutions
If your CGT question is not dealt with in this list of FAQ's, please address your query to cgt@sars.gov.za
1. We are an exempt institution. What is the effect of CGT on us?
Paragraph 63 provide that a person must disregard any capital gain or loss in respect of the disposal of an asset where all receipts and accruals of that person are exempt from tax in terms of section 10 of the Act.
2. How are cultural trusts and foundations affected by Capital Gains Tax?
The capital gains and losses of all trusts, foundations and companies, which are exempt from tax on their income, will also be disregarded (i.e. exempted) for capital gains tax purposes. In addition, capital gains or capital losses on assets that are used solely to produce income, which is exempt from tax, will, with the exceptions of those assets mentioned below, be disregarded. The exceptions are shares, interest-bearing assets which produce the income which falls within the annual exemption and the copyrights of first owners.
Where an institution is an approved public benefit organisation in terms of section 30 of the Income Tax Act, any capital gains or losses that may arise in respect of a donation or bequest of an asset by taxpayers to that institution will be disregarded.
In short, CGT will have very little impact on these institutions other than possibly encouraging donations and bequests of appreciated assets to them.
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