Determination of Amount of Gain
23.39. It is recommended that to determine the amount of the gain there should be deducted from the proceeds of sale of the asset:
- (a) The cost of the asset, including all costs directly incurred in the purchase such as stamp duty, legal costs and agent's commission. This will apply in the case of assets purchased after the date of introduction of the tax, while to those already owned by the taxpayer at that date the provisions outlined in paragraphs 23.31–23.34 will apply.
- (b) Expenditure incurred in enhancing the value of the asset or preserving the taxpayer's title to it. This
would usually include the cost of improvements and
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additions but not expenditure that has been previously allowed as a deduction for income tax purposes. In particular, expenditure related to the use or enjoyment of the asset would not form part of the cost base nor would outgoings such as repairs or interest which have been allowed as a deduction for income tax purposes. - (c) Costs directly incurred in the sale of the asset, such as stamp duty, legal costs and agent's commission.
The actual capital gain thus determined then will be halved to give the taxable gain.