Page 32 - F6 - Capital Gains Tax - Base Cost
P. 32
Solution – loss-limitation rule 2
This is a historic loss situation. The market value was determined by
the taxpayer.
The expenditure incurred before valuation date of R250 exceeds both
the proceeds of (R150) and the market value (R200). Therefore par
27(3)(a) or loss-limitation rule 2 will apply.
The valuation date value will be the higher of
market value (R200), or
proceeds less the expenditure incurred on the asset after valuation
date (R150 – R25).
The capital gain will therefore be determined as follows:
Proceeds R150
Less : Base cost
Valuation date value (par 27(3)(a)) R200
Add: Expenditure after valuation date 25
(225)
Capital loss (R75)
