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Plexus Wealth Watch – March 2016

Capital Gains Tax (CGT) is really becoming a problem for our clients. While that at least means that our investments have increased in value, the recent increase in the inclusion rate relating to CGT has made matters worse.

To reAcap, for individuals, 40% of any capital gain is included in taxable income. A R1million gain thus results in R400, 000 being added to taxable income.

If you are fortunate enough to be in the 41% tax bracket, this means tax of R164, 000. This is sharply up from a 33% inclusion rate pre 29 February this year, and 25% when Capital Gains Tax (CGT) was introduced in 2001.

This tax is thus effectively 16.4% of the gain.

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