South Africa capital gains tax: 40% inclusion rate for individuals, annual exclusion R40,000, primary residence exclusion, small business disposal relief, death exclusion.
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Accountant-authored. Written and published by Werner Britz, an accountant approved on OpenAccountants. Their licence number (04884432) is published on their profile, so you can check it against the register yourself. General reference material, not advice on your specific facts; don't file, pay, or take a position on it without a professional reviewing your situation.
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Inclusion rate (individuals)
40% of net capital gain included in taxable income
Inclusion rate (companies)
80%
Inclusion rate (trusts)
80% (special trusts: 40%)
Annual exclusion
R40,000 per year (individual)
Death exclusion
R300,000 in the year of death
Primary residence exclusion
First R2,000,000 of gain exempt
Top effective CGT rate (individuals)
~18% (40% inclusion × 45% top marginal rate)
Legislation
8th Schedule to the Income Tax Act 58 of 1962
Form
IT12 (individual tax return), Schedule 8
CGT calculation formula
Net capital gain = Capital gains − Capital losses − Annual exclusion (R40,000) Taxable portion = Net capital gain × 40% (individuals) Tax = Taxable portion × marginal income tax rate (up to 45%) Maximum effective rate = 40% × 45% = 18%
Annual exclusion
Every individual receives a R40,000 annual capital gains exclusion — the first R40,000 of net gains each year is tax-free.
Year of death exclusion
In the year of death: R300,000 exclusion applies instead.
Primary residence exclusion amount
Gain from disposal of a primary residence is excluded up to R2,000,000.
Conditions for primary residence exclusion
The property must have been the individual's primary residence during ownership; Only one primary residence per person (and per married couple/civil union); Property must be in South Africa; If the property is partly used for business, the exclusion is apportioned
Small business disposal relief
Where a person aged 55+ disposes of an asset used in a small business (market value < R10,000,000) in contemplation of retirement, a R1,800,000 lifetime exclusion applies (separate from the annual exclusion).
Capital losses offset rule
Capital losses can only be offset against capital gains (not other income). Unused losses carry forward indefinitely.
Base cost
Generally the cost of acquisition including incidental costs.
Valuation date
Assets owned before 1 October 2001 — the base cost is determined by a valuation date election method (market value, 20% of proceeds, or time-apportionment).
Non-resident CGT scope
South Africa taxes non-residents on gains from: Immovable property situated in South Africa; Assets of a permanent establishment in South Africa
Non-resident exclusions
Non-residents are generally NOT taxed on gains from South African shares or other movable assets (unless those assets are attributable to a PE).
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Quick reference
| Item | Value |
|---|---|
| Inclusion rate (individuals) | 40% of net capital gain included in taxable income |
| Inclusion rate (companies) | 80% |
| Inclusion rate (trusts) | 80% (special trusts: 40%) |
| Annual exclusion | R40,000 per year (individual) |
| Death exclusion | R300,000 in the year of death |
| Primary residence exclusion | First R2,000,000 of gain exempt |
| Top effective CGT rate (individuals) | ~18% (40% inclusion × 45% top marginal rate) |
| Legislation | 8th Schedule to the Income Tax Act 58 of 1962 |
| Form | IT12 (individual tax return), Schedule 8 |
Capital gains are not taxed at a separate rate. Instead, a percentage of the gain (the "inclusion rate") is added to taxable income and taxed at the taxpayer's marginal income tax rate.
Working paper only. The valuation date election for pre-October 2001 assets requires specific analysis. Have a qualified South African CA(SA) or tax practitioner review.
No independent accountant check is recorded for this version. Items flagged for further clarification are tracked separately and excluded here.
Need a company or personal tax return in South Africa? Tell OpenAccountants what is due and when. Start with a free 30-minute call. We confirm availability, the accountant responsible and the price before you commit.
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