CGT valuation of private company shares and members interests

Capital gains tax or CGT is somewhat of a misnomer as the Capital Gains legislation does not prescribe a capital gains tax, but an amount of a capital gain which must be added to ones income before calculating the taxes payable.

Different types of taxpayer therefore pay different effective rates of tax upon capital gains. CGT Effective Rates.

The effective date of CGT was 1 October 2001 and all assets, which include shares in private companies and members interests in close corporations, must have a base cost at that date.

Various methods of arriving at a base cost have been defined and the taxpayer may elect to use any one of them.

However the method of "Open market value" as at 1 October 2001 may only be utilized if the valuation is carried out by no later than 30 September 2003. Should the valuation not be carried out before then, this method of establishing the base cost will not be allowed?

We can assist you in valuing your private entity shares or members interest so that you do not lose this method of establishing the base cost of an asset.