I’ve written extensively on the double CGT Trap but there’s a subtle one that I missed.

Let’s say you buy a company that owns fixed property that cost it R500 000. You pay R2m for the shares.

You have effectively paid R2m for the property, right?

Then at some stage the company sells the property for R3m to buy another. It cost you R2m so, in reality you’ve made a capital gain of R1m.

But wait a minute, the Base Cost of the property is what the company paid for it, R500 000, so when it sells it, it will make a taxable Capital Gain of R2,5m.

Now, what if your company had not bought the company but had bought the property, or the business of renting the property? It paid R2m for it and that is its base cost when it sells it. So its taxable Capital Gain is only R1m.