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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 Capital assets as per section 2 of 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 asset is:

  1. Sold, exchanged, transferred or distributed; or
  2. Cancelled, redeemed, relinquished, destroyed, lost, expired or surrendered.

 

Who it applies to? 

The tax applies on gains arising from disposal of capital 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.

 

Registration

The person, who is required to comply with the requirements of the Income Tax Act 2015, should firstly obtain a Taxpayer Identification Number (TIN).  Registration and sign up for TIN can be done online through our TPOS portal on >>https://tpos.frcs.org.fj/taxpayerportal#/Logon<<.

 

 Requesting for CGT certificate online

CGT certificate can be applied online through our TPOS portal through the “Request” tile. It is one of the mandatory requirement to transfer capital assets.

A user guide with step by step process on CGT application is available on  https://www.frcs.org.fj/wp-content/uploads/2021/11/FINAL-TPOS-FRCS_Capital-Gain-Tax-Certificate_User-Manual-External.pdf.

Click on >>CGT Document Requirements<<  to request online for CGT certificate

Filing of CGT returns

A person is automatically liable to file CGT return within one month after the disposal of the capital assets, except if the person has disposed shares listed on the South Pacific Stock Exchange (SPSE).

Assets that are subject to CGT

The following are the capital assets that attract CGT upon disposal but subject to exemption and deferral provisions, as provided for in the Income Tax Act 2015:

  • Real property, structural improvement or an interest in real property
  • Lease of real property
  • Yachts
  • Ship and Boats
  • A membership interest in a company, security or other financial asset
  • Intangible assets e.g. goodwill
  • An interest in a partnership or trust
  • An airplane, helicopter or other aircraft
  • An option, right or other interest in an asset but does not include trading stock, or a business intangible.

Exempt Capital Gains

  • A capital gain made by a resident individual or Fiji citizen that does not exceed FJD$30,000;
  • A capital gain made by a resident individual or a Fiji Citizen on disposal of either the individual’s first residential property or principal place of residence;
  • A capital gain made by a person on the disposal of shares listed on the South Pacific Stock Exchange;
  • A capital gain made on disposal of an asset that is used solely to derive exempt income;
  • any gain made by a person on the disposal of an interest in a company within section 2© of the definition “company”.
  • A capital gain made by a resident individual or a Fiji Citizen on disposal of his or her interest in a family home, provided that the disposal of the interest is by way of transfer to an existing joint tenant or tenant in common;
  • A capital gain made by a resident person from the sale of shares where a private company goes through re-organization, restructure or amalgamation for the purposes of listing or as part of a listing process on the South Pacific Stock Exchange, provided that—
  1. the private company is listed on the South Pacific Stock Exchange within 24 months from the date of commencement of re-organization, restructure or amalgamation; and
  2. where the private company is not listed with the South Pacific Stock Exchange in accordance with sub-paragraph (i), the gain from the re-organization, restructure or amalgamation of the private company shall be taxable under this Act;
  • A capital gain made by the trustee or beneficiary of a deceased estate on the disposal of an asset forming part of the estate that, if the gain had been made by the deceased on a disposal of the asset immediately before death, the gain would be an exempt capital gain to the deceased, but only when the asset is disposed of by the trustee or beneficiary within 2 years after the death of the deceased or within such further time as the CEO allows.
  • A capital gain made by a person on the disposal of shares if the shares were held by the person before 1st May 2011.

Deferral of Recognition of Capital Gain

For the purpose of CGT, no capital gain is taken to arise on the disposal of Capital Assets by the transferor in any of the following cases:

  1. Disposal of an asset between spouses (including a de-facto spouse) as part of a divorce settlement or under an agreement to live apart.
  2. Disposal of an asset by reason of the transmission of the asset on the death of a person to an executor or beneficiary of the person’s estate.
  3. Transfer of a principal place of residence, first residential property, an interest in a capital asset, or shares in a company, by reason of love and affection between spouses (including a de-facto spouse), siblings, parents to children and vice versa, and grandchildren to grandparents and vice versa.
  4. Disposal of an asset by reason of loss, destruction or compulsory acquisition of the (referred to as the “replaced asset”) if the consideration for the disposal is reinvested by the recipient in an asset of a like kind (referred to as a “replacement asset”) within one year of the disposal or within such further period as the CEO allows.

However, the transferee may be liable for CGT should it be disposed at a gain at a later date.

Consequences on Failure to Comply

Failure to submit CGT returns and make necessary payments will render you liable for penalties. CGT returns lodged late will attract late lodgment penalty of 20% on the amount of CGT payable. CGT paid late will attract late payment penalty of 25% on the amount of CGT payable.

 Further Information

For more information, please contact us on telephone 1326 or email info@frcs.org.fj, or visit any of our Offices in Suva, Nausori, Rakiraki, Ba, Lautoka, Nadi, Sigatoka, Labasa and Savusavu.

 

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