CGT exemption

[whatwhat]

You get 40K CGT “free” a year, so was thinking of switching some of my unit trusts around to “reset” the capital gains on them.

I assume this is legal, or is this considered washing?

Also if you have something like Coronation is there a way to see CGT amount before switch? Or at least estimate of it?

 

[SauRoNZA]

CGT only applies if you are selling and would then be applicable on the diffference between the original purchase price and selling price.

Perfectly legal, but can be tricky to manage as not every unit trust or sale there of necessarily qualifies.

Something to remember that the tax on capital gains is already much lover than any other regular income tax.

You would need to work out what the original purchase cost was and then the guess the price at point of sale time, this is why it's very tricky with unit trusts or the like where you contributed monthly or at intervals.

 

[Snyper564]

Also remember if you didnt hold these long they could qualify as income tax not cgt

Also what is WASHING?

 

[whatwhat]

Also remember if you didnt hold these long they could qualify as income tax not cgt

Also what is WASHING?

Have had these for about 7 years already, and buying every month.

Washing was a fraud term in one of the SARS docs if I remember correctly where you sell something and then rebuy it in a very short period to take advantage of some loophole.

 

[Snyper564]

Have had these for about 7 years already, and buying every month.

Washing was a fraud term in one of the SARS docs if I remember correctly where you sell something and then rebuy it in a very short period to take advantage of some loophole.

Oh weird, essentially if you buy and resell in a short period it goes from CGT to Income tax as it is more "speculative" in nature and a trade for example.

If you holding 7 years likely fine for CGT though

 

[SauRoNZA]

I seem to recall 3 years or more and it’s CGT but was never a hard rule and they could deem it otherwise based on discretion.

 

[Verde]

Yes if you don't use the exemption you lose it. Everyone should do it.