Tax Law

Capital gain can is referred to a tax on income derived from the sale of a capital asset. As provided for by the Blacks Law Dictionary. The Income Tax Act revised Edition of 2011, does not define what capital gain is but rather under section 3 of the same Act which is interpretation section defines what GAIN is. It is thereof defined as “From the realisation of an asset or liability has the meaning as atestament to it by section 36”. Section 36(1) provides that; A person's gain from the realisation of an asset or liability is the amount by which the sum of the incomings for the asset or liability exceeds the cost of the asset or liability at the time of realisation.

Hence from the above provisions it can be concluded that capital gain refers to a tax on chargeable gains emanating from chargeable disposals of chargeable possessions.In most occasions, the amount of a capital gain is treated as income and subject to the marginal rate of income tax.

It has been observed that capital gains and losses are nothing more than of form of profit or loss from a particular source, namely, the disposition of property in a capital transaction. That means a transaction the profit or loss from which is not included in or deducted from a taxpayer’s income as ordinary income or loss from office or employment, business or property or another source.

The following illustrations remark on the imposition therefore administration of Capital Gain Tax; that is once possessions i.e assests (buildings, land etc) of a taxpayer are sold by one, the Mandate duties that will fall before one are that he will be required to forfeit a maximum of ten percent as Capital gain Tax. The chargeable section of capital gains is section 90(1) of the Act as amended by the Finance Act 2012 under section 29. However, the following are excluded from capital gains tax:

A private residence that you have owned continuously for three years or more and lived in continuously or...