Capital Gains Tax (CGT) MCQs

Questions and answers prepared by Tawanda. Tatenda. Herbert [F6 ZWE Lecturer]
Extracted from F6 (ZWE) REVISION KIT FOR 2019

1. On 10 July 2018, Brian sold the following shares

i. Shares in Adaptec Limited, a company listed on the Zimbabwe Stock Exchange (ZSE)
for total proceeds of US$52,500. The shares had originally cost US$22,000 when
purchased on 18 April 2011.
ii. Shares acquired in Zero (Private) Limited for total proceeds of US$58,400. The shares
had originally cost US$16,900 when purchased in May 2012.

What is Brian’s final capital gains tax liability in respect of the disposal of these shares?

A. US$3,445
B. US$8,318
C. US$13,123
D. US$ 8,233

2. Which of the following documents should be presented to the Zimbabwe Revenue Authority
(ZIMRA) when applying for capital gains tax clearance certificate (form CGWT 4A) on sale of
immovable property?

1) Copy of the agreement of sale

2) Copy of CR14
3) Copy of proof of payment of the sale price
4) Certificate of incorporation
5) Completed capital gains tax form (CGT1 Form)
6) Original tax invoice.

A. All of the above

B. 1, 3, 5 and 6
C. 1, 3, 4, 5 and 6
D. 1, 3 and 5

3. Stanley had the following share investments

Date acquired Original valuation

Quoted shares 14 March 2013 16,000
Unquoted shares 15 April 2013 24,000
Unquoted shares 20 January 2010 18,000

The share investments disposed during the year in 2018 as follows:

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 US$
Quoted shares 40,000
Unquoted shares (bought on 15 April 2013) 32,000
Unquoted shares (bought on 20 January 2010) 23,000

What is the final capital gains tax liability on disposal of the shares?

A. US$2,430
B. US$2,190
C. US$1,470
D. US$5,390

4. Squaremeter Limited owned properties which were to be demolished by Zimbabwe National

Roads Administration (ZINARA) to pave way for the construction of a high way on 6
November 2018. As compensation for the destruction of the concerned properties,
Squaremeter Ltd received a total of US$ 600,000 as compensation on 12 November 2018.
The details of the demolished property are as follows:

Asset Date acquired/ constructed Cost ITV

Land 6 October 2012 120,000 120,000
Block of offices 10 June 2012 50,000 41,250
Factory Building 29 December 2015 70,000 59,500
240,000 220,750

Assuming that withholding tax was deducted as per statutory requirement. What was the
amount of capital gains tax for the year ended 31 December 2018?

A. US$25,350 payable
B. US$25,350 refundable
C. US$29,200 refundable
D. US$29,200 payable

5. Sonia held 30,000 shares in Arenel (Private) Limited. On 16 October 2018, Sonia disposed of
24,000 of her shares in Arenel (Private) Limited for a price of US$1.50 per share. The details of
Sonia’s original shareholding in Arenel (Private) Limited are as follows:

Date acquired No. of shares Total cost (US$)

Ordinary shares 5 March 2013 20,000 12,000
Bonus shares 20 July 2016 10,000 -
30,000 12,000

What was the capital gains tax payable on the disposal of the Arenel (Private) Limited shares
on 16 October 2018?

A. US$4,800
B. US$4,992

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 C. US$4,440
D. US$3,150

6. Sarah suffered a capital loss on disposal of her principal private residence (PPR) in May 2018.

How can she relieve (claim) the capital loss?

A. It is not claimable
B. Carry it forward against any future capital gains
C. Set it off against her trading income for the year 2017
D. Carry it back against previous disposal gain

7. Which of the following is an exempt asset for Capital Gains Tax (CGT) purposes?

A. Shares
B. Land
C. Commercial vehicles
D. Blok of flats

8. Keith purchased 800 shares in Shallow (Pvt) Ltd for US$9,800 in 2012. In 2014, Keith received
an additional 400 shares in the company as a result of a bonus issue.

During 2018, Keith sold 600 of his shares in Shallow (Pvt) Ltd for US$8,500.

What is Keith’s final capital gains tax payable or refundable?

A. $573
B. $548
C. $27
D. $131

9. Which of the following assets are exempt from capital gains tax?

1) Goodwill
2) Immovable property owned by a building society
3) Shares
4) Debentures
5) Motor vehicles

A. 2, 3 and 4
B. 1, 2 and 4
C. 3, 4 and 5
D. 1, 2 and 5

10. Sarah purchased shares in Supreme Limited, a company listed on the Zimbabwe Stock
Exchange (ZSE), in February 2018 for US$10,000. In October 2018 she sold the shares for
US$18,000.

What is Sarah’s capital gains tax?

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 A. $180
B. $900
C. $1,550
D. $3,600

11. Which of the following are deemed sales for capital gains tax (CGT) purposes?

1) Donation of shares
2) Compensation for machinery destroyed by fire
3) Compensation for immovable property taken over by government
4) Maturity of a bond purchased at a discount
5) Disposal of shares ordered by the High Court

A. 1, 2, 4 and 5
B. 1, 2, 3 and 4
C. 1, 3, 4 and 5
D. 1, 2, 3 and 5

12. During the year ended 31 December 2018, Chenjerai disposed of the following shares.

Date acquired Original cost Gross proceeds

Listed shares 5 March 2012 8,200 12,000
Unlisted shares 7 March 2015 12,500 18,000

Chenjerai turned 56 years old 12 March 2018.

What is the amount of capital gains tax payable by Chenjerai for the year ended 31
December 2018 on the disposal of shares?

A. $952
B. $970
C. $610
D. $592

13. Which of the following disposals are subject to capital gains tax?

1) Donation of shares
2) Redemption of debentures issued at discount
3) Sale of a Principal Private Residence by a 60 year old person
4) Expropriation of a specified asset

A. 1 and 4 only
B. 1, 2 and 4 only
C. 3 only
D. All of the above

14. On 3 May 2014, Anna bought a house in Kopje, Gweru for US$ 12,000. She lived in the house
from the date of purchase until she sold the house for US$35,000 on 24 November 2018. She
used US$28,000 of the proceeds to replace the house she had disposed.

What is the amount of rollover relief on disposal of the principal private residence?

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 A. $21,500
B. $4,300
C. $17,200
D. $860

15. On 6 February 2018, Palesa sold shares she bought in BBC Limited for US$16,000. These shares
were bought on 12 March 2014 for US$5,000. BBC Ltd is an unlisted company.

How much is Palesa’s final capital gain tax payable tax?

A. $800
B. $2,075
C. $10,375
D. $1,275

16. Maneta sold her house for US$65,000 on 1 July 2018. The house was bought in 2013 for
US$22,500. After the sale, she bought another house which cost US$40,000.

How much of Maneta’s capital gain can be rolled over?

A. $15,048
B. $39,125
C. $24,077
D. $3,010

17. Which of the following can be exempt from capital gains tax?
(1) Transfer of specified assets between spouses
(2) Donation of a house to a cousin
(3) Transfer of specified assets between companies under the same control
(4) Expropriation of land by government

A. 2 and 3 only
B. 1 and 4 only
C. 1 and 3 only
D. 2 and 4 only

18. Mollin, a 59 year old doctor at Mpilo Hospital disposed of her primary residence in August
2018 for US$38,000. She had originally purchased the property for US$10,000 in October 2016.
She has an unused capital loss of US$1,200.

What is Mollin’s capital gains tax for the year ended 31 December 2018?

A. $5,090
B. $5,450
C. $5,210
D. $0

19. Jessica is 62 years old. She disposed her unlisted shares on 12 July 2018 for US$18,000. The
shares were originally acquired on 7 November 2013 for US$5,400.

What is the capital gains tax payable on the disposal of the shares?

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 A. $2,520
B. $2,358
C. $1,998
D. $1,098

20. During 2018, Angela sold the following shares:

(1) Shares acquired in Skills Ltd, an unlisted company for total proceeds of US$28,000. The
shares had originally cost US$12,000 when purchased in May 2013.
(2) Shares in Flair Ltd, a company listed on the Zimbabwe Stock Exchange (ZSE) for total
proceeds of US$42,000. The shares had originally cost US$18,600 when purchased on 10
August 2011.

What is Angela’s final capital gains tax liability in connection with the disposal of these
shares?

A. $3,260
B. $6,776
C. $1,820
D. $2,840

21. Sino Limited’s office block was completely destroyed by fire in April 2018. The office block
was constructed at a cost of US$120,000 and brought into use on 28 February 2012.

The company has always claimed minimum capital allowances. Sino Ltd received
compensation of US$100,000 in June 2018 in respect of the destruction of the building.

What is the amount of capital gains tax payable by Sino Ltd for the year ended 31 December
2018?

A. $8,200
B. $7,570
C. $0
D. $5,000

22. Qhelani owned a house in Matopo which she sold on 8 November 2018 for US$ 175,000.
Selling costs amounted to US$800. The base cost of the house was US$45,000 in 2014. Qhelani
has an unused capital loss brought forward from the 2011 year of assessment of US$2,500.

What is the amount of capital gains tax for the year ended 31 December 2018?

A. $24,715
B. $24,215
C. $24,375
D. $24,175

23. Perez Holdings Ltd has a farm in Shurugwi and was designated for land redistribution at the
end of 2018. The company was given compensation of US$560,000.

The assets were as follows:

Assets Cost Year of Acquisition ITV Compensation

Land 120,000 2016 120,000 300,000

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 Farm improvements 40,000 2015 10,000 60,000
Security wall 90,000 2015 22,500 200,000

What is the capital gains tax payable for the year ended 31 December 2018?

A. $57,600
B. $59,400
C. $38,100
D. $54,900

24. Orbit Investments Ltd had erected a factory building in 2012 at a cost of US$240,000.
Renovations were undertaken the same year at a cost of US$10,000 to make the building
suitable for state of the art machinery which had been bought overseas. The building was
sold for US$500,000 in November 2018. The company’s policy is to claim wear and tear on
fixed assets.

What is the amount of capital gain on disposal of the factory building?

A. $42,500
B. $26,250
C. $41,250
D. $62,250

25. Pauline, a 36 year old teacher bought property in Avondale area of Harare for US$60,000 at
the end of 2013 tax year. In 2014 she built a durawall for US$2,000 and a swimming pool for
US$3,500. During 2015, a garage and storeroom were constructed for US$4,200 and US$3,600
respectively. The property was however gutted by fire on 1 January 2018 when the family
was celebrating New Year. As the property was insured, she received a payout of
US$100,000 of which US$80,000 was used to acquire another property in Greystone Park in
Harare.

What is Pauline’s capital gain for the tax year ended 31 December 2018?

A. $3,246
B. $16,232
C. $21,360
D. $12,986

26. Which of the following statements in NOT a condition to be met by parties seeking to avoid
capital gains on transfer of assets?

A. The transfer of assets must be between companies under the same control
B. The reason for the transfer must be associated with a scheme of reconstruction or merger
C. An election must be made by both parties
D. An election must be made within 30 days of effecting the transfer

27. In September 2016, Rapid (Pvt) Ltd, a Zimbabwean incorporated company, purchased and
began using a block of offices in the central business area of Bulawayo. The purchase price
of this property was US$80,000. In December the same year, the company effected
improvements to the block of offices at a cost of US$20,000.

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 In July 2018 the company entered into negotiations to sell the property to Watson
Investments Ltd and use the proceeds to buy a larger administration block in the same area.
However, due to delays by Watson Investment in paying the amount, the company used its
own capital resources to purchase the administration block for US$180,000. The sale of the
old property to Watson Investments was eventually concluded in October 2018 for the sum
of US$240,000.

What is the capital gains tax payable by Rapid (Pvt) Ltd for the year ended 31 December
2018?

A. $27,500
B. $6,625
C. $26,500
D. $6,875

28. Shupikai is 54 years old. In October 2018, she sold 4,000 shares in Gushungo (Pvt) Ltd. The
shares had been bought in April 2015 at $3.50 per share and were sold for US$6 per share.

Shupikai had an unutilised capital loss on sale of one of her shares in 2010 of US$90.

What is Shupikai’s capital gains tax liability on the disposal of shares?

A. $1,772
B. $1,790
C. $1,702
D. $1,720

29. Violet Ltd’s showroom was completely destroyed by a fire in October 2018. The showroom
had been constructed at a cost of US$50,000 and brought into use on 16 March 2012.
Champions Insurance, Violet Ltd’s insurance company paid them compensation of
US$80,000 in November 2018 in respect of the destruction of the showroom.

What is the amount of capital gains tax payable by Violet Ltd for the year ended 31
December 2018?

A. $4,250
B. $5,750
C. $12,000
D. $4,500

30. In July 2018, Agatha sold her house in the Esigodini area under an instalment sale agreement
for US$88,000. She had bought the house for US$26,000 in March 2011. On 29 December 2012
she effected major renovations to the house at a total cost of US$15 000. Under the deed of
sale the buyer paid a cash deposit of US$28,000 and agreed to make three equal yearly
payments commencing in the year of disposal.

What is the capital gains tax payable by Agatha for the year ended 31 December 2018?

A. $4,274
B. $7,835
C. $2,493
D. $3,561

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31. Tapiwa aged 60 years left Jacobs (Pvt) Ltd at the end of November 2018. He got a job in
Namibia as a consultant and before he left the country he sold his primary residence for
US$50 000. The primary residence had been bought for US$20 000 in January 2016.

What is the capital gain tax payable for the year ended 31 December 2018?

A. $5,700
B. $6,000
C. $0
D. $5,100

32. In May 2018, Silk Ltd disposed its industrial building under suspensive sales conditions for
US$400,000. The building had been acquired in for US$150,000 in 2013 and the company did
not elect for special initial allowance in the year of acquisition. The sales agreement
revealed that a quarter of the proceeds was payable immediately with the balance
payable in 3 equal instalments.

What is the capital gain for the year ended 31 December 2018?

A. $113,750
B. $227,500
C. $22,750
D. $200,000

33. Dennis owns two properties in Zimbabwe in his personal name, his primary residence and a
holiday house. The primary residence was acquired in February 2016 for US$25,000. The
holiday house was purchased on 6 December 2015 for US$18,000 and its current market
value is US$60,000. Dennis decides to sell his primary residence for US$42,000 and donate the
holiday house to his only daughter.

What is the amount of capital gains tax payable for the year ended 31 December 2018?

A. $11,800
B. $11,065
C. $8,040
D. $3,025

34. Solomon had the following transactions in the shares of Whitestone (Pvt) Limited.

February 2012 purchased 2,200 shares for $5,800

May 2012 purchased 1,800 shares for $3,800
July 2012 took up 1 for 4 rights issue at $2 per share
December 2018 sold all the shares for US$20,000

What is the amount of capital gain for the year ended 31 December 2018?

A. $6,370
B. $1,274
C. $7,227
D. $1,445

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35. Which of the following assets are exempt from capital gains tax?

(1) Bonds issued by the Government of Zimbabwe.

(2) Debentures
(3) Immovable property owned by an approved industrial developer.
(4) Plant and machinery in respect of which capital allowances have been claimed

A. 1, 2 and 3
B. 1 and 3
C. 1 and 4
D. 1, 3 and 4

36. To which of the following assets will capital gains tax apply for 2018.

1. Swimming pool equipment

2. Disposal of offices
3. Transfer of capital assets between father and a son
4. Donation of quoted shares on the Zimbabwe Stock Exchange (ZSE) held for less than one
year.
5. Disposal of a temporary car shelter

A. 1, 2, 3 and 4
B. 2, 3 and 4
C. 1, 2, 3 and 5
D. 2, 4 and 5

37. On 1 July 2018, Susan sold shares she bought in TTC Limited for US$98,000. These shares were
bought on 12 April 2011 for US$40,000. TTC Limited is an unlisted company.

How much is capital gains tax on the shares disposed by Susan?

A. $5,100
B. $980
C. $10,000
D. $10,200

38. Arnold sold a house for US$60,000 on 10 May 2018. The house was bought in 2013 for
US$24,000. After the sale, he bought another house which cost US$45,000.

How much of Arnold’s capital gain can be rolled over?

A. $8,100
B. $24,400
C. $32,400
D. $27,600

39. Emmanuel sustained a capital loss of US$800 on the disposal of marketable securities in the
tax year 2011. In the tax year 2018, Emmanuel earned a capital gain of US$600 on sale of
marketable securities.

Which of the following treatments of the capital loss sustained in the tax year 2011 will be
correct in the tax year 2018?

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 A. No amount of capital loss can be brought forward for set off during the tax year 2018 or
carried forward to any subsequent tax year.
B. A capital loss of US$600 will be brought forward and set off against the 2018 capital gains
from securities. The balance of US$200 will be forfeited.
C. A capital loss of US$600 will be brought forward and set off against the 2018 capital gains
from securities. The balance of US$200 will be carried forward to subsequent tax periods.
D. A capital loss of US$800 will be brought forward and set off against the 2018 capital
gains.

40. Mr. Victor Mandizha bought a house for US$58,000 in Vainona suburb of Harare in February
2009. He got married to Elizabeth in September 2014. Mr and Mrs Mandizha divorced in
August 2016 and the court awarded the house to Mrs. Mandizha who has custody of two
minor children. Mrs Mandizha was therefore ordered to pay her ex-husband half the market
value of the house which was pegged at US$70,000.

In October 2018, Mrs Mandizha sold the house for US$84,000, put the children in a boarding
school and immigrated to South Africa.

What is the capital gains tax payable by Mrs Mandizha on disposal of the house?

A. $4,330
B. Nil
C. $3,750
D. $2,300

41. Which of the following statements is NOT true about the definition of a principal private
residence?

A. It must have been a person’s sole or main residence during the period it was owned by
him.
B. It must have been a person’s sole or main residence for at least 4 years prior to its
disposal.
C. The land surrounding such property should not exceed 4 hectares.
D. Only one residence is considered as a PPR in the case of a person owning more than
one residence.

42. Which of the following disposals would NOT result in a charge to capital gains tax?

A. The sale of shares in a company not listed on a stock exchange.

B. The sale of a house which has been used as a principal dwelling for the past five years.
C. The sale of immovable property by a charitable organisation.
D. The disposal of a block of flats by a businessman.

43. Which of the following operations is NOT considered to constitute a sale for the purpose of
the charge of capital gains?

A. Sale by instalments
B. Expropriation
C. Donation
D. Lease

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44. Which of the following is NOT one of the conditions which must be satisfied in order to
successfully claim a relief available for transfers of assets between companies?

A. The transferor and the transferee must make an election to the effect that the transfer
price shall be equal to the income tax value of the transferred assets.
B. The transfer of the assets must be between companies under the same control.
C. The transfer of assets must relate to specified assets only.
D. The transfer of assets must be for a reason associated with a merger, scheme of
reconstruction or other business combination which is justifiable to ZIMRA.

45. On 16 September 2018, Simbarashe offered his son a wedding gift of 5,000 listed shares.
Simbarashe had originally acquired the shares in 2016 for $0.75 per share. The market price of
the shares as at 16 September 2018 was $3.25 per share.

What is the amount of capital gains tax payable by Simbarashe for the year ended 31
December 2018?

A. $2,443.75
B. $162.50
C. Nil
D. $812.50

46. Silibaziso and Chengetai are married and jointly own the principal private (PPR) which they
reside in. Silibaziso was born on 4 August 1964 and Chengetai was born on 24 December
1962.

During the year ended 31 December 2018, Silibaziso and Chengetai disposed of the
following property.
Date acquired Cost Market value
Main residence 10 February 2014 100,000 250,000
Swimming pool 6 March 2014 20,000 55,000
Swimming pool equipment 18 September 2014 5,000 10,000
125,000 315,000

What is the amount of capital gains tax payable by Silibaziso and Chengetai for the year
ended 31 December 2018, taking into account any available tax concessions which would
minimise their tax burden?

A. $17,000
B. $34,875
C. $34,000
D. $17,875

47. Which of the following statements are TRUE about assessed capital losses?

1. Only capital losses of more than US$100 can be carried forward to future years.
2. Assessed capital losses can only be deducted from capital gains and cannot be offset
with any other form of income.
3. Assessed capital losses can be carried forward to future years for an indefinite period.
4. Capital losses can be deducted from capital gains from the sale of either an immovable
property or a marketable security.

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 A. All of the above
B. 1, 2 and 3 only
C. 2 and 3 only
D. 2, 3 and 4 only

48. Which of the following is NOT part of the qualifying criteria for a claiming a rollover relief?

1. The seller must acquire another residence before the end of the year following that of
sale.
2. The new immovable property must be acquired by using the proceeds from the sale of
the existing immovable property
3. Election must be made prior to the date on which the tax return is lodged for capital
gain assessment
4. The disposed immovable property should have been the seller’s (tax payer’s) sole and
main residence during the period

A. 2 only
B. All of the above
C. None of the above
D. 1 and 2 only

49. Pamela was born on 12 March 1961 and is married to Bruce, born on 18 May 1963.

During the year ended 31 December 2018, Pamela and Bruce disposed of the following
shares.
Date acquired Original Cost Gross proceeds
US$ US$
Unlisted 22 February 2015 4,600 8,800
Listed 18 August 2016 9,400 15,200
24,000

The listed shares were bought Bruce and the unlisted shares by Pamela.

What is the amount of capital gains tax payable by Pamela and Bruce for the year ended 31
December 2018?

Pamela Bruce
A. $388 $760
B. $748 $152
C. $748 $1,019
D. $388 $152

50. Which of the following assets are exempt from capital gains tax?

1) Goodwill
2) Disposal of specified assets by non-profit organisations
3) Disposal of specified assets by a registered licensed investor or industrial park developer.
4) Disposal of a principal private residence by an elderly person.
5) Transfer of specified assets to beneficiaries in a deceased estate.
6) Transfer of specified assets between companies under common control.

A. 1, 2, 3 and 4

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 B. All of the above
C. 2, 4 and 6
D. None of the above

51. Which of the following is NOT one of the conditions which must be satisfied in order to
successfully claim a relief available on transfer of an immovable asset by an individual to a
company controlled by him?

A. The individual must be in control of the company, whether through holding of the
company’s shares or otherwise.
B. The company will continue to use the immovable property for the purposes of its trade.
C. The asset must have been held by the individual for at least 12 months
D. The immovable property was previously used by the individual for the purposes of his
trade.

52. Mrs. Modesta Ndiweni acquired the following properties on 31 December 2015:

US$
Main House 20,000
Temporary car shelter 2,000
Swimming pool 4,000

She disposed the whole property on 1 January 2018.

What is the amount of inflation allowance to be incorporated in the calculation of Mrs.

Modesta Ndiweni’s capital gain in 2018?

A. $2,400
B. $2,600
C. $1,800
D. $1,950

53. Valentine is 57 years old. In September 2018, he sold 2,000 shares in Dendairy Pvt Ltd. The
shares had been bought in November 2016 at $2 per share and were sold for US$5 per share.

Valentine had an assessed capital loss on sale of one of his residential homes in 2011 of
US$1,900.

What is Valentine’s capital gains tax liability on the disposal of shares?

A. $800
B. $1,160
C. $1,540
D. $1,180

54. Hloniphani was born on 18 February 1961 and is married to Sekai, born on 4 September 1963.
On 2 August 2018, Hloniphani and Sekai disposed of their matrimonial residence, situated in
Masvingo.

The following information refers to Tino and Chenai’s residential property:

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 Date acquired/constructed Cost (US$)
Undeveloped land 2011 25,000
Main residence 2011 110,000
Boundary wall 2011 15,000
150,000

The property was sold via an estate agent at its market value of US$300,000. Hloniphani and
Sekai paid the estate agent commission of 10% of the sale proceeds in connection with the
disposal of their property.

What is the amount of capital gains tax (CGT) payable by Hloniphani and Sekai for the year
ended 31 December 2018?

A. $18,750
B. $9,000
C. $18,000
D. $9,375

55. For each of the following statements concerning capital losses select whether it is true or
false:
True False
Capital losses can be carried forward to future years for an
unrestricted period
Capital losses arising from sale of marketable securities cannot be
offset with capital gain arising from sale of immovable property
Only capital losses of more than US$100 can be carried forward to
future years
Capital losses less than US$100 will be offset with trading income
for that year

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Answers to multiple choice questions
1. D
Withholding tax
Listed shares (52,500 x 1%) 525

Computation of capital gains tax payable on unlisted shares

Gross capital amount 58,400
Less; Allowable Deductions
Original cost price of shares 16,900
Inflation allowance (16,900 x 2,5% x 7 years) 2,958 (19,858)
Capital gains 38,542
Capital gains tax @ 20% 7,708

Final capital gains tax liability = 525 + 7,708 = 8,233

2. D

3. C
Withholding tax
Quoted shares (40,000 x 1%) 400

Computation of capital gains tax payable on unquoted shares

Gross capital amount (32,000 + 23,000) 55,000
Less; Allowable Deductions
Original cost price of shares (bought on 20 January 2010) (18,000)
Original cost price of shares (bought on 15 April 2013) (24,000)
Inflation allowance
Shares (bought on 20 January 2010) (18,000 x 2.5% x 9 years) (4,050)
Shares (bought on 15 April 2013) (24,000 x 2.5% x 6 years) (3,600)
Capital gain 5,350
Capital gains tax @ 20% 1,070

Final capital gains tax liability = 400 + 1,070 = 1,470

4. B
Gross capital Amount 600,000
Less: Recoupment
Block of flats (50,000- 41,250) (8,750)
Factory building (90,000 – 22,500) (10,500)
Capital amount 580,750
Less: Allowable Deductions
Land 120,000
Block of flats 41,250
Factory building 59,500
Inflation Allowances:
Land (120,000 x 2,5% x 7 years) 21,000
Block of flats (50 000 x 2,5% x 7 years) 8,750

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 Factory building (70,000 x 2,5 % x 4 years) 7,000 (257,500)
Capital gain 323,250
Capital gains tax 64,650
Withholding tax (15% x 600,000) (90,000)
Capital gains tax refundable 25,350

5. B
Gross Capital Amount (24,000 x $1.50) 36,000
24,000
Less: Cost price ( 𝑥 $12,000) 9,600
30,000
Inflation allowance (9,600 x 2.5% x 6 years) 1,440 (11,040)
Capital gain 24,960
Capital gains tax @ 20% 4,992

N.B. The inflation allowance on the bonus shares will still be computed from the date the
original shares were acquired.

6. B
Capital losses can be carried forward indefinitely, therefore they can be set off against
future capital gain

7. C
Commercial vehicles do not meet the definition of specified assets, therefore their disposal
does not attract capital gains tax.

8. B
Gross Capital Amount 8,500
600
Less: Cost price ( 𝑥 9,800) 4,900
1 200
Inflation allowance (4,900 x 2.5% x 7 years) 858 (5,758)
Capital gain 2,742
Capital gains tax @ 20% 548

9. D

10. A
$18,000 x 1% = $180. NB: For listed shares the withholding tax of 1% is the final tax.

11. C

12. C
Listed shares
Capital gains withholding tax (1% x $12,000) 120

Unlisted shares
Gross Capital Amount 18,000
Less: Elderly person exemption (1,800)
Less: Cost price (12,500)
Inflation allowance ($12,500) x 2.5% x 4 years) (1,250)
Capital gain 2,450

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 Capital gains tax @ 20% 490

Total Capital gain tax payable = $120 + $490 = $610

Note: The US$1,800 exemption for elderly tax payers only applies on the disposal of unlisted
shares.

13. B

14. C
Gross capital amount 35,000
Less: Allowable Deductions
Cost price 12,000
Inflation allowance
(12,000 x 2.5% x 5 years) 1,500 13,500
Potential capital gain 21,500
28 000 𝑥 21 500
Rollover Relief ( ) (17,200)
35,000
Capital gain 4,300

15. B
Gross Capital Amount 16,000
Less: Allowable Deductions
Cost price 5,000
Inflation allowance (5,000 x 2.5% x 5 years) 625 (5,625)
Capital gain 10,375
Capital gain tax @ 20% 2,075

16. C
Gross Capital Amount 65,000
Less: Allowable Deductions
Cost price 22,500
Inflation allowance (22,500 x 2.5% x 6 years 3,375 25,875
Potential capital gain 39,125
40,000 𝑥 39,125
Less: Rollover relief ( ) (24,077)
65,000
Capital gain 15,048

17. C
Transfer of specified assets between spouses and between companies under the same
control can be exempted from capital gains tax provided the involved parties elect.

18. D
Capital gain on sale of a private principal residence by an elderly person of 55 years and
above is exempt from capital gains tax.

19. C
Gross capital amount 18,000
Less: Exemption for Elderly persons (1,800)
Capital amount 16,200
Less: Allowable Deductions
Cost price 5,400
Inflation allowance (5,400 x 2.5% x 6 years) 810 6,210
Capital gain 9,990

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 Capital gains tax @ 20% 1,998

20. A
Unlisted shares
Gross Capital Amount 28,000
Less: Allowable Deductions
Cost 12,000
Inflation allowances (12,000 x 2.5% x 6 years) 1,800 (13,800)
Capital gain 14,200
CGT @ 20% 2,840

Listed shares
Withholding tax @ 1% [42,000 x 1%] 420
Total Capital Gains Tax 3 260

21. C
Considering that the amount of compensation is below the actual cost of buying the office
block there is no capital gain.

22. B
Gross capital amount 175,000
Less: Allowable Deductions
Base cost 45,000
Inflation allowances (45,000 x 2.5% x 5 years) 5,625
Selling costs 800
Capita loss (2009) 2,500 (53,925)
Capital gain 121,075
Capital gain tax at 20% 24,215

23. A
Gross capital Amount 560,000
Less: Recoupment Farm improvements (40,000- 10,000) (30,000)
Security wall (90,000 – 22,500) (67,500)
Capital amount 462,500
Less: Allowable Deductions
Land 120,000
Farm improvements 10,000
Security wall 22,500
Inflation Allowances:
Land (120,000 x 2,5% x 3 years) 9,000
Farm improvements (40 000 x 2,5% x 4 years) 4,000
Security wall (90,000 x 2,5 % x 4 years) 9,000 (174,500)
Capital gain 288,000
Capital gains tax 57,600

24. C
Gross Capital Amount 500,000
Less: Recoupment (250,000 x 5% x 6 years) (75,000)
Capital amount 425,000
Less: ITV (250,000 – 75,000) 175,000
Inflation allowances (250 000 x 2,5% x 7 years) 43,750 (218,750)
Capital gain 206,250

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 Capital gains tax @ 20% 41,250

25. A
Gross Capital Amount 100,000
Less: Allowable Deductions
Property 60,000
Durawall 2,000
Swimming pool 3,500
Garage 4,200
Storeroom 3,600
Inflation allowances
Property (60,000 x 2,5% x 6 years) 9,000
Durawall (2,000 x 2,5% x 5 years) 250
Swimming pool (3,500 X 2,5% x 5 years) 438
Garage (4,200 x 2,5% x 4 years) 420
Storeroom (3,600 x 2,5% x 4 years) 360 (83,768)
Potential capital gain 16,232
80 000 𝑥 16 232
Rollover relief (12,986)
100 000
Capital gain 3,246

26. D

27. C
Gross capital Amount 240,000
Less: Recoupment [(80,000 + 20,000) x 2.5% x 2 years] (5,000)
Capital amount 235,000
Less: Allowable Deductions
Block of offices (80,000 + 20,000 – 5,000) (95,000)
Inflation allowance (100,000 x 2.5% x 3 years) (7,500)
Capital gain 132,500
Capital gains tax at 20% 26,500

28. D
Gross Capital Amount (4,000 X $6) 24,000
Less: Allowable deductions
Cost (4,000 X $3.50) 14,000
Inflation allowance (14,000 X 2.5% X 4 years) 1,400
Assessed capital loss 0 (15,400)
Capital gain 8,600
CGT @ 20% 1,720
Note: Only capital losses of more than US$100 can be carried forward to future years.

29. A
Gross capital Amount 80,000
Less: Recoupment (50,000 x 2.5% x 6 years) (7,500)
Capital amount 72,500
Less: Allowable Deductions
Showroom (50,000 – 7,500) (42,500)
Inflation allowance (50,000 x 2.5% x 7 years) (8,750)
Capital gain 21,250
Capital gains tax at 20% 4,250

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30. A
Gross Capital Amount 88,000
Less: Cost Price 26,000
Improvements 15,000
Inflation allowances
House (26,000 x 2.5% x 8yrs) 5,200
Improvements (15,000 x 2.5 % x7yrs) 2,625 48,825
Potential Capital Gain 39,175
Suspensive Sales Allowance (see working below) (17,807)
Capital Gain 21,368
Capital Gain Tax @ 20% 4,274

Calculation of suspensive sales allowance

40 000 𝑥 39 175
= 17 807
88 000

31. C
Income from the sale or disposal of a principal private residence by an elderly taxpayer is
exempt

32. A
Gross Capital Amount 400,000
Less: Recoupment (150,000 x 5% x 5 years) (37,500)
Capital Amount 362,500
Less: Allowable Deductions
ITV (150,000- 37,500) 112,500
Inflation allowance (150,000 x 2.5% x 6 years) 22,500 (135,000)
Potential capital gain 227,500
200 000 𝑥 22 7500
Suspensive sales allowance (113,750)
400 000
Capital gain 113,750

33. B
Gross capital Amount (60,000 + 42,000) 102,000
Less: Allowable deductions
Primary residence (25,000)
Holiday house (18,000)
Inflation Allowances:

Primary residence (25,000 x 2.5% x 3 years) (1,875)

Holiday house (18,000 x 2.5% x 4 years) (1,800)
Capital gain 55,235
Capital gains tax at 20% 11,065

34. A

Gross Capital Amount 20,000

Less: Allowable deductions
Cost – 2,200 shares 5,800
1,800 shares 3,800
1
Rights issue [(2,200 + 1,800) x x $2] 2,000 (11,600)
4
Inflation allowance [(11,600 x 2,5% x 7 years) ( 2,030)

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 Capital Gain 6,370

35. B

36. B

37. C
Gross Capital Amount 98,000
Less: Allowable deductions
Cost of shares 40,000
Inflation allowance (40,000 x 2,5% x 8 years) 8,000 (48,000)
Capital Gain 50,000
Capital gains tax at 20% 10,000

38. B
Gross Capital Amount 60,000
Less: Allowable deductions
Cost 24,000
Inflation allowance (24,000 x 2,5% x 6 years) 3,600 (27,600)
Potential Capital Gain 32,400
32,400 𝑥 45,000
Roll over Relief ( ) (24,300)
60,000
Capital Gain 8,100

39. C

40. D
Gross Capital Amount 84,000
Less: Allowable deductions
Cost 58,000
Inflation allowance (58,000 x 2,5% x 10 years) 14,500 (72,500)
Capital Gain 11,500
Capital gains tax at 20% 2,300

41. C

42. C

43. D

44. C

45. B
Capital gains withholding tax suffered
5,000 x $3.25 x 1% = $162.50

46. A
Gross capital amount (250,000 + 55,000) 305,000
Less: Property excluding equipment (120,000)
Inflation allowance (120,000 x 2.5% x 5 years) (15,000)

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 170,000
Less: Elderly person exemption for Chengetai (170,000 x 50%) (85,000)
Capital gain 85,000
Capital gains tax @ 20% 17,000

47. A

48. C

49. D
Pamela (unlisted shares)
Gross Capital Amount 8,800
Less: Elderly persons exemption (1,800)
Less: Cost Price (4,600)
Inflation allowance ($4,600 x 2.5% x 4 years) (460)
Capital gain 1,940
Capital gain tax at 20% 388

Bruce (listed shares)

Capital gains withholding tax (1% x $15,200) 152

50. B

51. C

52. A
Inflation allowances
Main House (20,000 x 2.5% x 4 years) 2,000
Temporary car shelter (not a specified asset) 0
Swimming pool (4,000 x 2.5% x 4 years) 400
2,400

53. A
Gross Capital Amount (2,000 X $6) 12,000
Less: Exempt portion for Elderly persons (1,800)
10,200
Less: Allowable deductions
Cost (2,000 X $2) 4,000
Inflation allowance (4,000 X 2.5% X 3 years) 300
Assessed capital loss 1,900 6,200
Capital gain 4,000
CGT @ 20% 800

Notes
 For elderly taxpayers (55 years and above) income of US$1,800 from the sale or disposal
of marketable securities is exempted from capital gains tax
 Capital losses are carried forward and deducted from capital gains arising in the same
year from the sale of either an immovable property or a marketable security.

54. B
Gross Capital Amount 300,000
Less: Allowable deductions

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 Cost 150,000
Inflation allowance (150,000 X 2.5% X 8 years) 30,000
Agent commission (300,000 x 10%) 30,000 (210,000)
Capital gain 90,000
Less elderly taxpayer exemption – Hloniphani (50% x 90,000) (45,000)
Sekai’s share of capital gain to be taxed 45,000
CGT @ 20% 9,000

55.
True False
Capital losses can be carried forward to future years for an
unrestricted period True
Capital losses arising from sale of marketable securities cannot be
offset with capital gain arising from sale of immovable property False
Only capital losses of more than US$100 can be carried forward to
future years True
Capital losses less than US$100 will be offset with trading income
for that year False

About the author

Tawanda. Tatenda. Herbert is an ACCA member and an
Oxford Brookes University Registered Online Mentor for the B.Sc.
(Hons) in Applied Accounting. He holds the Bachelor of
Science (Honours) Degree in Applied Accounting from Oxford
Brookes in UK. He is a Registered Public Accountant in
Zimbabwe. He is the Founder and Managing Partner of Herbert
& Co. Chartered Accountants.

© T. T. Herbert 2019

Contact details
Cell: +263773038651 / +263712560772
WhatsApp: +263773038651 / +263712560772
Website: www.herbertmentor.com
Email: ttherbertacca@gmail.com
: obumentorship@herbertmentor.com

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