Capital Gains Tax (CGT)
(Replaced Land Sales Tax with effect from 1 May, 2011)
What it is?
Capital Gains Tax (CGT) is a tax that is levied on profits or gains realized on the disposal of capital assets, at the rate of 10%, with effect from 1 May, 2011.
Capital Gains Tax is imposed and collected on a self-assessment basis and the vendor is liable for the tax. It is computed on the VAT Exclusive Price (VEP) of the capital asset. It does not apply to trading stock or assets that are not listed in the Income Tax Act 2015.
Disposal includes any transaction whereby ownership of an asset is transferred from one person
to another. For CGT purposes, a transfer is deemed to be made once the transfer document is
stamped and cleared by Chief Executive Officer.
Who it applies to?
The tax applies on gains arising from disposal of taxable assets, by Fiji residents, irrespective of whether the asset is located in Fiji or not. Resident persons can claim foreign tax credit in
relation to disposal of foreign capital assets if tax was paid offshore. However, for non-residents the tax only applies on gains arising from disposal of taxable assets that are Fiji assets.
The person who is required to comply with the requirements of the Income Tax Act 2015 should first of
all obtain a Tax Identification Number (TIN). Registration forms are also available from any FRCS Customer Service Centre.
Assets that are subject to CGT
The following are the capital assets that attract capital gains tax upon disposal but subject to exemption and deferral provisions, as provided for in the Income Tax Act 2015:
Exempt Capital Gains
(i) the private company is listed on the South Pacific Stock Exchange within 24 months from the date of commencement of re-organisation, restructure or amalgamation; and
(ii) where the private company is not listed with the South Pacific Stock Exchange in accordance with sub-paragraph (i), the gain from the re-organisation, restructure or amalgamation of the private company shall be taxable under this Act;
Deferral of recognition of capital gain
For the purpose of Capital Gains Tax, no capital gain is taken to arise on the disposal of Capital Assets
by the transferor in any of the following cases:
However, the transferee may be liable for Capital Gains Tax should it be disposed at a gain at a later date.
Accounting for Capital Gains Tax
A Capital Gains Tax return must be filed within one month after the disposal of the capital asset regardless of gain or loss made except for disposal of shares listed on the South Pacific Stock Exchange (SPSE).
The related Capital Gains Tax payment should be made within one month after the disposal of the capital asset.
Failure to lodge CGT returns and make necessary payments will render you liable for penalties. Capital Gains Tax returns lodged late will attract late lodgment penalty of 20% on the amount of CGT payable. Capital Gains Tax paid late will attract late payment penalty of 25% on the amount of CGT payable.
Lodging of Capital Gains Tax Return & Supporting Documents
It is mandatory for the solicitor, accountant or the vendor to lodge the following documents with FRCS to facilitate the processing and issuance of a Capital Gains Tax certificate.
The following documents shall be lodged together with the Capital Gains Tax return.
|||Capital Gains Tax CHECKLIST |
|1||Capital Gains Tax declaration form (IRS 228) |
|2||Capital Gains Tax return form (IRS 230) |
|ADDITIONAL INFORMATION THAT MAY BE REQUIRED|
|3||Breakdown and evidence of capital improvements|
|4||Written confirmation of the vendor’s address as opposed to the location of the property|
|5||Passport and visa of the vendor if they are residing overseas|
|6||Valuation report for non-arm’s length transaction and selling of commercial property below the acquisition cost|
|7||Evidence of the source of fund if major structural improvement is done on the property|
|8||Loan offer from the bank if the property is under mortgagee sale|
|9||Sale and purchase agreement|
Refer to the Capital Gains Tax Practice Statement No.34/2016 for more information
The application and Capital Gains Tax return is to be lodged with the assessing officers located at the Customer Service Centre  in Suva. Capital Gains Tax returns can also be lodged in other FRCS offices but these will then be sent to Suva and Lautoka offices for processing.
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