South Africa taxes capital gains not at a flat rate but by adding a fraction of the gain — the inclusion rate — to your income and taxing it at your marginal rate. This calculator applies the annual exclusion, the correct inclusion rate for your taxpayer type, and your marginal rate to give the actual CGT due.
How the SARS inclusion-rate method works
The calculation follows the SARS method:
gain = proceeds − baseCost
afterExclusion = max(0, gain − annualExclusion) (R40,000 for individuals)
taxableGain = afterExclusion × inclusionRate (40% individual, 80% company/trust)
CGT = taxableGain × marginalRate%
effectiveRate = CGT / gainBecause only the inclusion-rate fraction is taxed, the effective CGT rate is well below your headline marginal rate — at most about 18% for a 45% individual taxpayer.
Worked example
An individual selling shares for R500,000 with a R300,000 base cost has a R200,000 gain. After the R40,000 exclusion, R160,000 remains; at the 40% inclusion rate the taxable gain is R64,000, and at a 39% marginal rate the CGT is about R24,960 — an effective rate near 12.5% on the gain.
Inclusion rates by taxpayer type
| Taxpayer | Inclusion rate | Effective top rate (45% bracket) |
|---|---|---|
| Individual | 40% | ~18% |
| Special trust | 40% | ~18% |
| Company | 80% | ~22.4% |
| Ordinary trust | 80% | ~36% (trust rate 45%) |
The difference between 40% (individual) and 80% (company) is dramatic: the same nominal gain produces double the taxable amount inside a company. Hold long-term investments personally where practical.
Key planning points
Primary residence exclusion. If you sell your main home, the first R2 million of any capital gain is excluded before the R40,000 annual exclusion. Most ordinary home sales in South Africa therefore attract no CGT at all. Enter only the gain above R2 million when using this calculator for a primary home sale.
Year-of-death exclusion. In the tax year you die, the annual exclusion rises from R40,000 to R300,000. This does not affect most planning calculations but is worth noting for estate work.
What counts as base cost. Base cost is not simply the purchase price. It includes the purchase price, costs of acquisition (transfer duty, agent fees), the cost of capital improvements, and costs of disposal (agent commission on sale). A higher documented base cost directly reduces your gain and the CGT owed. Keep all receipts.
Keeping records to support your base cost
SARS places the burden of proving base cost on the taxpayer. On a property disposal, keep purchase agreements, transfer duty receipts, agent commission invoices, and receipts for capital improvements (extensions, renovations) for as long as you own the asset plus five years after the year of disposal. Missing records force you to use the market value on the valuation date (1 October 2001) as the base cost, which may be higher or lower than your actual cost depending on the asset.
Why “there is no CGT rate” trips people up
The single most common misunderstanding is expecting a headline CGT percentage. There isn’t one. CGT in South Africa is income tax on a fraction of the gain, so your effective rate depends on three things at once: the annual exclusion, the inclusion rate for your taxpayer type, and your marginal income-tax bracket. The table below shows how the effective rate on a gain moves with the marginal bracket, for an individual at the 40% inclusion rate:
| Marginal income-tax rate | Effective CGT rate on the gain |
|---|---|
| 18% | 7.2% |
| 26% | 10.4% |
| 31% | 12.4% |
| 39% | 15.6% |
| 45% (top) | 18.0% |
The 18% figure quoted everywhere is simply 45% × 40% — the maximum effective rate, reached only by top-bracket individuals. Most taxpayers pay less.
Figures that change each tax year
The R40,000 annual exclusion, the R2 million primary-residence exclusion, the R300,000 year-of-death exclusion, the 40%/80% inclusion rates and the marginal brackets are all set by the annual Budget and the Income Tax Act. They have been stable recently but are exactly the numbers to re-confirm on the SARS site for the relevant year of assessment.
Sources
- SARS — Capital Gains Tax — inclusion rates, exclusions and the calculation method.
- SARS — Tax rates for individuals — the marginal brackets applied to the taxable gain.
This is a planning estimate — confirm figures with a tax adviser or on SARS eFiling. Everything runs locally in your browser.