Page 30 - F6 - Capital Gains Tax - Base Cost

Solution – Pre-valuation (profit)

He may adopt, as the valuation date value of the asset

on 1 October 2001,

 its market value (R25 000) or

 20% of the proceeds (R130 000) less the expenditure

incurred after 1 October 2001 (R2 000), i.e. 20% of

R128 000, or R25 600.

 Since the higher amount will be R25 600, Mr A will

no doubt choose this amount as his VDV the base

cost of the asset will be 25 600 + 2 000 = 27 600