(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 if the vendor is not registered for VAT. It does not apply to trading stock or assets that are not listed in the .
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 CGT Decree should first of
all obtain a Tax Identification Number (TIN). Registration forms are also available from any FRCA 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 CGT Decree:
|LIST OF CAPITAL ASSETS|
|1||Land, a structural improvement to land, or an interest in land, including lease|
|2||Vessels of over 100 tonnes|
|4||A share, security, equity, or other financial asset|
|5||An intangible asset|
|6||An interest in a partnership or trust|
|7||An airplane, helicopter or other aircraft|
|8||An option, right, or other interest in an asset referred to above, other than an asset that is trading stock for the purposes of the Income Tax Act|
Exempt Capital Gains
There are basically four categories of capital gains that are exempt from the capital gains tax.
Deferral of recognition of capital gain
For the purpose of this Decree, no capital gain is taken to arise on the disposal of Capital Assets
by the transferor in each 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
Where a gain on the disposal of a capital asset is liable to capital gains tax, a Capital Gains Tax return must be filed within 30 days after the disposal. The related Capital Gains Tax payment should be made on the same day the return is lodged. Failure to make necessary payments will render you liable for penalties. Capital Gains Tax returns lodged late will also attract late lodgment penalty of 20% on the amount of tax 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 FRCA 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)|
|3||Stamped transfer document|
|4||Last dealing – previous transfer document|
|5||TIN number of the vendors|
|6||Undertaking from the solicitors for payable cases|
|7||Details with evidence of cost of improvements and incidental cost|
|ADDITIONAL INFORMATION THAT MAY BE REQUIRED|
|8||Breakdown and evidence of capital improvements|
|9||Written confirmation of the vendor’s address as opposed to the location of the property|
|10||Passport and visa of the vendor if they are residing overseas|
|11||Valuation report for non-arm’s length transaction and selling of commercial property below the acquisition cost|
|12||Evidence of the source of fund if major structural improvement is done on the property|
|13||Loan offer from the bank if the property is under mortgagee sale|
|14||Sale and purchase agreement|
Refer to the Capital Gains Tax Practise Statement no.34 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 FRCA stations but these will then be sent to Suva for processing.
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