n Tax Breaks Newsletter - How to avoid CGT on loan accounts by deceased estates : capital gains tax
|Article Title||How to avoid CGT on loan accounts by deceased estates : capital gains tax|
|© Publisher:||Moneyweb (Pty) Ltd|
|Journal||Tax Breaks Newsletter|
|Publication Date||Oct 2009|
|Pages||4 - 5|
Paragraph 12(5) of the Eighth Schedule to the Income Tax Act 58 of 1962, as amended, was introduced to deal specifically with the scenario where a debt owed by a debtor to a creditor is reduced or discharged by the creditor for no consideration, or for one which is less than the amount by which the face value of the debt is reduced or discharged. In these circumstances, the debtor is liable for Capital Gains Tax (CGT) on an amount equal to the extent to which the debtor has been relieved of his obligations. The debtor is deemed to have acquired a claim to so much of the debt as is reduced or discharged for no consideration, and to have disposed of the claim for proceeds equal to the reduction or discharge.
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