n Farmer’s Weekly - Understanding income tax and capital gains tax : tax advice




Income tax is levied upon the money or value of goods earned by a taxpayer who is a resident within the tax jurisdiction. Your capital assets, money in the bank, an inheritance, loan account, and dividends due to you from a local company are all examples of capital - and capital is tax-free. Capital gains tax (CGT) is levied under a fairly narrow set of circumstances, as we'll see shortly. So, salaries and rentals are taxable. But dividends from local companies or close corporations and some dividends from offshore companies are tax-free. They must, however, be disclosed as part of your gross income, which is the total of all taxable amounts earned, plus dividends and the value of so-called fringe benefits.


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