CAPITAL GAIN TAX

What is CGT

 Tax charged when a capital asset is disposed off.

Chargeable Assets

 Immovable property i.e. land and buildings,

commercial, industrial and residential.
 Movable property i.e. Company shares and loan notes
(debentures).
 Plants and equipment's for which capital allowance was
never claimed for whatever reason (this is uncommon).
 Exempt Disposals
All
 property that claim capital allowance excluding
land and buildings.
First individual owned residential property (not a

company owned).
 Individual owned residential disposed property
reinvested in another residential property. Only if
reinvestment was d within 24 months of disposal.
Property of companies acquired by Approved

Superannuation Fund, Motor Vehicle insurance
Fund, Approved Provident Fund, Statutory Life
Insurance fund. On condition that the asset
disposal is made within 3 months after the
company acquisition.
Exempt Disposals (Conti..)
 Provided a Shares and debentures of companies listed
on stock exchange weather local or abroad (of at least
50% of shares).

 Property of a Land exploration, mining and quarrying

business.

 Assets of Botswana incorporated companies accredited

by The Botswana International Financial Services
Centre (IFSC).
IMMOVABLE PROPERTY
BASIC COMPUTATION FORMAT
Sales proceeds xx
Less incidental disposal costs (xx)
Net Proceeds xx

Cost of asset xx
Add incidental acquisition costs xx
xx
Asset improvement costs xx

Indexation Adjusted cost (asset + improvement) (xx)

Chargeable Disposal Gain xx

Add Other Chargeable Disposal Gains xx

Taxable Disposal Gain xx

CGT Payable (computed as determined in tax table) xx

MOVABLE PROPERTY
BASIC COMPUTATION FORMAT
Sales proceeds xx
Less incidental disposal costs (xx)
Net Proceeds xx

Cost of asset xx
Add incidental acquisition costs xx
Net Costs (xx)

Chargeable disposal Gain xx

25% movable property allowance (xx)

Net Chargeable Disposal Gain xx

Add Other Chargeable Disposal Gains xx

Taxable Disposal Gain xx

CGT Payable (computed as determined in tax table) xx

Sales Proceeds & Asset Cost

Sales Proceeds
 The price / consideration at which the property was sold.
 Generally should be at arms length i.e. market price.
Where not at arms length transaction (mostly for related
parties), the CG may consider using fair value.

Asset Cost
 The purchase price of the property.
 Where asset was inherited or received as gift, the market
value at sale’s date is used as the cost.
Incremental Disposal &
Incremental Acquisition Costs
 Incidental Disposal Costs.
 Estate agent fees.
 Transfer document fees.
 Pre disposal advertisement costs.

 Incidental Acquisition Costs.

 Leasehold document costs.
 Legal fees.
 Any other cost incurred in acquisition.
 Indexation

This
 is an adjustment made the costs of immovable property, in recognition that the National Cost Of Living
which varies with time. It is called the National Cost Of Living Index (NCOLI).
This
 adjustment is done separately for cost to acquire the property and cost of improvement done later, to
ensure that the appreciating nature of immovable property prices does not disadvantage the tax payer.

Ba sic formula;
Indexation Adjusted cost =

Disposal date NCOLI - NCOLI Acquisition date

NCOLI Acquisition date

Capital Losses
 When a property's net Cost exceeds proceeds, a Capital loss
occurs.
 The loss is used to offset other chargeable capital gains in the
same tax year.

 A net capital loss may be carried forward to offset the

aggregate taxable capital gain in the next tax year.

 A net capital loss may only be carried forward for one year.