{"id":38976,"date":"2024-01-23T12:04:46","date_gmt":"2024-01-23T12:04:46","guid":{"rendered":"https:\/\/swoopfunding.com\/za\/?post_type=business-glossary&#038;p=38976"},"modified":"2025-04-24T14:47:05","modified_gmt":"2025-04-24T14:47:05","slug":"capital-gains-tax","status":"publish","type":"business-glossary","link":"https:\/\/swoopfunding.com\/za\/business-glossary\/capital-gains-tax\/","title":{"rendered":"Capital gains tax"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><strong>Definition<\/strong><\/h3>\n\n\n\n<p>Capital gains tax is a type of tax levied on the profit or gain realised from the sale or disposition of certain types of assets, known as capital assets.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What are capital gains tax?<\/strong><\/h3>\n\n\n\n<p>The tax is applicable when the selling price of the asset exceeds its original purchase price, resulting in a <a href=\"https:\/\/swoopfunding.com\/za\/business-glossary\/capital-gains\/\">capital gain<\/a>. Capital assets typically include long-term investments held for a certain period, such as stocks, real estate, and other securities.&nbsp;<\/p>\n\n\n\n<p>Different tax rates apply to short-term and long-term capital gains. Short-term gains are typically taxed at the individual&#8217;s ordinary income tax rates, while long-term gains may qualify for preferential tax rates, which are generally lower than ordinary income tax rates.<\/p>\n\n\n\n<p>Investors may consider various strategies to manage capital gains tax, such as tax-loss harvesting, where capital losses are intentionally released to offset gains, or holding investments for the long term to qualify for lower tax rates.<\/p>\n\n\n\n<p>Capital gains tax rates and regulations can vary significantly between countries, and they may be subject to change based on legislative decisions and economic conditions.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Example of capital gains tax<\/strong><\/h3>\n\n\n\n<p>Let&#8217;s consider a simple example to illustrate capital gains tax:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Purchase of stock: Investor A purchases 100 shares of a company&#8217;s stock for R50 per share, resulting in a total investment of R5,000.<\/li>\n\n\n\n<li><a href=\"https:\/\/swoopfunding.com\/za\/business-glossary\/holding-period\/\">Holding period<\/a>: After holding the stock for more than one year, Investor A decides to sell the shares when the stock price has increased to R70 per share.<\/li>\n\n\n\n<li>Calculation of capital gain:<\/li>\n<\/ul>\n\n\n\n<p>Selling price: 100 shares x R70 per share = R7,000<\/p>\n\n\n\n<p>Purchase price (Basis): 100 shares x R50 per share = R5,000<\/p>\n\n\n\n<p>Capital gain: R7,000 &#8211; R5,000 = R2,000<\/p>\n\n\n\n<p>Since Investor A held the stock for more than one year, the capital gain is considered a long-term capital gain.<\/p>\n\n\n\n<p>Assuming a long-term capital gains tax rate of 15%, the tax on the R2,000 gain would be 15% of R2,000, equal to R300.<\/p>\n\n\n\n<p>After accounting for capital gains tax, the net proceeds from the sale would be:<\/p>\n\n\n\n<p>R7,000 (selling price) &#8211; R300 (capital gains tax) = R6,700.\u00a0<\/p>\n\n\n\n<p>Investor A realised a capital gain of R2,000 from the sale of stock and incurred a long-term capital gains tax of R300. The net proceeds after accounting for the tax are R6,700.<\/p>\n","protected":false},"author":1,"template":"","class_list":["post-38976","business-glossary","type-business-glossary","status-publish","hentry"],"acf":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","image_blog":"","image_podcast":"","image_banking":"","image_blog_internal":"","image_blog_medium":"","image_single_banking":""},"post_excerpt_stackable_v2":"<p>Definition Capital gains tax is a type of tax levied on the profit or gain realised from the sale or disposition of certain types of assets, known as capital assets.&nbsp; What are capital gains tax? The tax is applicable when the selling price of the asset exceeds its original purchase price, resulting in a capital gain. Capital assets typically include long-term investments held for a certain period, such as stocks, real estate, and other securities.&nbsp; Different tax rates apply to short-term and long-term capital gains. Short-term gains are typically taxed at the individual&#8217;s ordinary income tax rates, while long-term gains&hellip;<\/p>\n","category_list_v2":"","author_info_v2":{"name":"root","url":"https:\/\/swoopfunding.com\/za\/author\/root\/"},"comments_num_v2":"0 comments","_links":{"self":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/business-glossary\/38976","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/business-glossary"}],"about":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/types\/business-glossary"}],"author":[{"embeddable":true,"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/users\/1"}],"wp:attachment":[{"href":"https:\/\/swoopfunding.com\/za\/wp-json\/wp\/v2\/media?parent=38976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}