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How do I calculate CGT on an asset bought before 2001?
How do I calculate CGT on an asset bought before 1 October 2001?
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Direct answer
For an asset acquired before 1 October 2001 and disposed of later, do not start with the original purchase price alone. SARS explains that the valuation-date value is used to exclude the portion of a gain attributable to the period before the valuation date. The relevant base cost includes that valuation-date value plus qualifying post-valuation-date expenditure, subject to the rules and the facts of the asset.
The safest course is to locate the historical records before selecting a method. The available method, evidence and outcome can differ for listed shares, unit trusts, property and other assets. A current sale is not a reason to invent a 2001 value from memory.
What this means in practice
Start with proof that the asset was held before 1 October 2001. This could include contract notes, a purchase agreement, portfolio statement, share register, old tax file, invoice or correspondence. Then create a second file for the period after that date: improvements, qualifying acquisition or disposal costs, corporate actions, valuations and sales evidence.
SARS's base-cost guidance describes valuation-date value and methods including market value on 1 October 2001, time apportionment and 20% of proceeds. It also explains a weighted-average method for certain identical assets such as listed shares and unit trusts. These are not interchangeable shortcuts. The correct option needs to be checked against the asset type, record quality and rules applicable to the transaction.
Listed South African shares have particular SARS valuation-date guidance. If market value or weighted average is used, the published historical share information and identification method can matter. Do not use a current web chart as evidence of a 2001 value. If the asset is not a listed share, do not assume the listed-share approach applies.
The gain is still calculated from supported proceeds and base cost. Include only qualifying costs. Ordinary running costs, expenses already claimed as deductions and private spending do not automatically become base cost. Preserve the calculation, but recognise that choosing a method can be technical where records are incomplete or the asset has a long history.
Step-by-step
- Establish the acquisition history.
Find proof that the asset was acquired before 1 October 2001. Record the acquisition date, ownership percentage and any later transfers or changes.
- Preserve valuation-date evidence.
Collect valuations, historical market data, broker records, old statements and other source documents relevant to 1 October 2001. Keep the original documents, not just a revised spreadsheet.
- Identify the asset-specific options.
Use the SARS base-cost and valuation guidance to determine which methods can be considered. For listed shares, also review the SARS material that specifically addresses listed-share valuation.
- Compile post-2001 qualifying costs.
Separate direct qualifying expenditure from expenses that were already deducted or are ordinary running costs. Record the document reference and date for every amount.
- Calculate and compare carefully.
Apply the selected, supported method and document the reasoning. Do not cherry-pick figures from different methods without checking whether they may be combined.
- Retain the full audit trail.
File the calculation with sale documents, valuation records, correspondence and the completed ITR12. Historic evidence becomes harder to obtain after the asset is sold.
Documents and records to keep
- Original acquisition agreement, contract note, invoice or share register.
- Valuation-date evidence and historical statements.
- Proof of qualifying expenditure after 1 October 2001.
- Corporate-action notices, broker reports and sale evidence.
- A calculation schedule, ITR12 and assessment.
Important limits and exceptions
This is an evidence workflow, not a recommendation of the most favourable method. There may be limitations on the use of a method or specific facts that change the result. Do not assume that market value is always best, that time apportionment always applies, or that the 20% method works for every asset.
The guide is also not a complete treatment of death, donation, inheritance, emigration, employee shares or connected-person transfers. Those events can change acquisition date, deemed proceeds or base cost. Take advice if the historic asset has any such feature.
When to get tailored advice
Get advice when original records are missing, the asset is valuable, the valuation method is uncertain, an old trust or estate is involved, or the asset was acquired through a share scheme or corporate reorganisation. TaxProof can help collect and organise the evidence, but an independent valuation or tax calculation may be needed before filing.