Sale of Captal Assets
A- Sale of investment assets ( company - lands,buildings,vehicles,shares..etc, individuals- Lands, houses )
b- Sale of Assets in use ( assets in company use, individuals occupied house)
Sale of investment assets liable to Capital Gain.
Exemption :
There is a special relief couched in the Act in relation to the principal residential house of a person. The sale of principal residence of a house of a person continuously owned for at least 3 years immediately before the transfer by the person would not attract the tax provided the person has been living there for at least two years. This relief is restricted to houses fulfilling the above criteria and cannot be used for any other house.
The Calculation Methodology
Cost of the asset
The base date set for 30th September 2017, thus, if you bought a land in 2000, then the cost would be the value of that land as at 30th Sept 2017. If you acquired the asset after that date, then it’ll be the cost of acquiring the asset.
Tax Calculation components
Total Cost = Cost of the asset + improvement + related service costs + incidental cost
Selling Price
Capital Gain
Tax Percentage
Capital Gain Tax = (Selling Price – Total Cost) * 10%
Example
Silva bought a land in 2016 for = 10,000,000.00
Built a house in 2017 for = 12,000,000.00
Other related costs = 2,000,000.00
Value as of 30th September 2017 (A) = 30,000,000.00
Silva Sold the House in May 2018 (B) = 35,000,000.00
Capital Gain (C) = (B)-(A) = 5,000,000.00
Capital Gain Tax = (C)*10% = 500,000.00
You might like this: They Said its Free, Is it really “Free”?
Important facts to consider
You cannot set off against loss of capital
Stamp duty of 4%, which is charged on registering a deed ownership is remaining unchanged
CGT to be paid within one month from the realization of the asset, the concept of ‘realization’ includes change in status of asset, ceasing to exist which could mean liquidation for a company and death for an individual, point of recouping the investment through the title continues with the person, change in the status of residence, write off of bad debt, etc.
When a transfer of an asset takes place due to death of a person, the CGT will not apply. Realization of trading stock, depreciable assets, investment assets or capital assets of a business will not be fallen into the source of the CGT. There are few other items which have been made exempt from the CGT. Consideration received for an asset shall not include an exempt amount, a final withholding payment or trading stock.
http://blog.advisor.lk/wp/2018/04/03/capital-gain-tax-everything-you-want-to-know-how-to-calculate/
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