Capital Gain Tax
This is a tax chargeable at the rate of 10% on capital gains arising from the disposal of capital assets. Capital gains mainly represent the excess of disposal proceeds realized over the cost of the particular asset. The effects of some of the provisions of the Capital Gains Tax Act 1967 are as listed below:
- Capital loss on disposal of any asset is not deductible from capital gains on disposal of any other asset even if both are of the same type.
- Chargeable gains are assessed on current year basis. In other words, the assessment is based on the year the asset is disposed.
- Roll-over relief is available to any company acquiring a new asset to be used for the purposes of the trade in replacement of an old one. This is of particular interest to companies as there could be benefit accruing to those that would want to claim the relief.
- When the consideration is payable by installments over a period exceeding 18 months, the chargeable gain shall be apportioned to the affected assessment years in proportion to the amount of the installments payable in each of the years.
- The production of evidence of payment of applicable capital gains tax is a condition for effecting change of ownership of property.
- Currently, gains arising from disposal of shares and stocks are exempted from capital gains tax.