NO CGT ON RETAIL BONDS
You are not liable for capital gains tax (CGT) on your investments in either fixed-rate or inflation-linked RSA Retail Bonds, because you earn only interest on these investments, the National Treasury has confirmed.
Confusion sometimes arises for investors over whether or not they are liable for CGT because of the terminology used in relation to inflation-linked retail bonds. Your original investment is referred to as your “capital” and this is adjusted every six months in line with changes to the consumer price index. The treasury has confirmed that this increase is not considered a capital gain but a payment of interest. In addition, you earn interest, at the prevailing rate, on the adjusted capital amount.
For the 2009/10 tax year, you will pay tax once the total interest from all your investments exceeds R21 000 a year if you are under 65 years of age or R30 000 if you are 65 years or older.