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Thread: Capital Gains Tax on Certified Numismatics

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    Question Capital Gains Tax on Certified Numismatics

    1) Someone discovers a stack of uncertified Krugerrands in grandpa's attic
    and decides to sell it. How is CGT calculated on the sale, provided that
    no record of the original purchase exists?

    2) Are all coins/medals that are certified by legitimate companies like NGC
    or PCGS exempt from CGT, even if the certification just states
    Brilliant Uncirculated?

    3) What is required for a coin to be classified as a collectors item that is
    free from CGT?

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    Alas, I have to answer my own question:

    1) The base cost for the Krugerrands will be their value in Oct. 2001, according
    to http://www.sacoin.co.za/info_topic8.html. The CGT will then be 13.3% of
    the gains from Oct. 2001 that is above the annual exclusion of R30,000 according
    to http://www.masthead.co.za/financiala...Feb%202012.pdf .


    2&3) "Your personal-use assets such as clothes, jewellery, stamps, art works, antiques, collectible coins and other personal effects.
    However, it excludes the following:
    a. A coin of which the intrinsic value is mainly attributable to the material from which it has been minted or cast." - From http://www.sars.gov.za/home.asp?pid=5247 .

    Furthermore:
    "“asset” includes—(a) property of whatever nature, whether movable or immovable, corporeal or incorporeal, excluding any currency, but including any coin made mainly from gold or platinum;"
    - From http://www.sars.gov.za/lnb/mylnb.asp...lrg/vlrg/p8k0a .

    And:
    "Personal use assets do not include—
    (a) a coin made mainly from gold or platinum of which the market value is mainly attributable to the material from which it is minted or cast;"
    - From http://www.sars.gov.za/lnb/mylnb.asp...lrg/vlrg/p8k0a .

    On http://www.ftrservices.co.za/cgt.htm it is stated:
    "Personal belongings (include)...coins and medallions (this does not apply to items like ...gold and silver coins)."
    I do not know where they get those facts regarding silver coins, and I believe that they made an error
    and should have it as 'gold and platinum coins', as mentioned in the SARS literature.


    So from these definitions I ascertain that any currency is exempt from CGT, bar the
    taxes applicable to Forex gains (which I know nothing about). But certainly currency
    like the old silver R1's would be exempt, as well as possibly the 80% and 50% silver
    Union coins.

    Any silver coin or coin not made mainly of Gold or Platinum is exempt from CGT, when
    that coin has a numismatic premium that values it above the spot price of its metal content.

    Certified coins almost always have some premium above intrinsic metal value, so
    any certification even on Gold and Platinum coins should be a strong argument
    against CGT and to the fact that it is then a collectible coin.

    Bullion bars are not mentioned, so for silver bullion not in coin form I do not know
    what conclusions to draw. I think it has to be assumed that they would not be regarded
    as personal use items, and would thus be CGT applicable.

    These are my own interpretations from the available information and I welcome
    any criticism or debate. Thank you.

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