Capital gains tax calculation -please help

[Basment Dweller]

Ok I get it now, this is perfect thanks.

I assume the company got the money from you to acquire the property? If that is the case then it would be unnecessary to declare a full dividend; it would first repay the loan it made from you.

Company acquired the assets from a loan account with my mother's estate. Does that mean we can pay her out tax free?

[CLIVE-TRIANGLE]

Yes. To the extent that the company borrowed from anybody, it can first repay the borrowing.

[dellatjie]

@Bassment Dweller, an important fact to take into account here, is whether the company is an SBC (Small Business Corporation).

How to determine if the company is an SBC? In summary:

* The the turnover must be less than R20 million per year
* None of the shareholders may have an interest in another CC/Company.
* Not more than 20% of the entity's income may consist of investment income/income from rendering a personal service (personal service is defined in the income tax act). As far as I understand, investment income includes interest as well as rentals.

Should the company be an SBC, it will qualify for very favourable tax rates. Instead of 28% on the taxable income, the tax payable will be as follows (in 2014):

ON 67111 0%
67112-365000 7%
365000-550000 21%
550000+ 28%