CGT is a tax levied on the profits made from the sale of an asset, such as property or an investment. Switching between the underlying unit trusts you are invested in will involve selling the units you wish to switch from and purchasing the new units you wish to switch into. This will therefore trigger a CGT event. So too will any investment withdrawals, as these transactions require the selling of units to make the necessary funds available.
CGT is levied at your marginal tax rate (unless otherwise provided for in your product rules). It applies to a fixed percentage of the cumulative profit made from all asset disposals within a financial year, less a specified amount that qualifies for exemption.
What is the impact on your investment?
Effective CGT rates have remained unchanged. Annual exclusion amounts have also remained unchanged.
• Individuals will be taxed on 33.3% of their capital gains.
The maximum effective capital gains tax rate is therefore 13.3%.
• An annual exclusion of R30,000 remains in place on realised capital gains.