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Capital gain available for relief is restricted to a percentage which is calculated as
Gain* CBA/CA
as there is difference between CBA and CA so why in the example provided in your lectures tutor adds up CA and CBA for putting in this formula.
Plz explain.Hi Ema – sorry but again I’m not sure what you mean by your question? The gain eligible for gift relief is indeed computed by multiplying the gain by CBA/CA. This of course is only an issue if investments are held by the company which are chargeable assets for capital gains purposes but are not business assets.
In a question you may have to calculate both the CBA and CA figures from the balance sheet given in the question. hence you do indeed add up the OMV of the CBA and then add the OMV of investments to give you the CA. These are then the figures you use in the calculation!!Hi sir,
Can you please explain with the example the point you are trying to explain me in your second para above.If applying gift relief on a gift of shares in a trading company, then the gift relief is limited if not all of the assets held by the trading company are actually trading assets (an investment asset is owned by the company). The part of the gain eligible for the relief is restricted to:
Gain on shares x CBA/CA
In example 9 there are CHARGEABLE BUSINESS assets held by the company of 700,000 (property and goodwill) and CHARGEABLE assets of 800,000 (CBA + investments of 100,000) hence the restriction in gift relief shown in the working to the answer.
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