Tax consequences of riot insurance payments | Tax Chronicles

​Businesses that are able to claim from the South African Special Risks Insurance Association (Sasria) for damage to premises or equipment from the July 2021 unrest need to be aware of the tax implications of payouts.

The destruction of an asset is a capital gains tax event. To put it in legal terms (ie, drily), “you are deemed to have disposed of your asset”.

If your office building, which some years ago cost R900,000 to build, burnt down (whether due to “insurrection” or otherwise), and you receive an insurance payment of R2 million, you have realised a capital gain of R1.1 million. If you did not have insurance against this event, you have incurred a capital loss.

Unfortunately, a capital loss does not reduce taxable income. A capital loss can only be used to reduce a capital gain. That means you will have to wait until you have a capital gain before you can use the capital loss.​



These materials are provided for general information purposes only and do not constitute legal or other professional advice. While every effort is made to update the information regularly and to offer the most current, correct and accurate information, we accept no liability or responsibility whatsoever if any information is, for whatever reason, incorrect, inaccurate or dated. We accept no responsibility for any loss or damage, whether direct, indirect or consequential, which may arise from access to or reliance on the information contained herein.

© Copyright Webber Wentzel. All Rights reserved.

Webber Wentzel > News > Tax consequences of riot insurance payments | Tax Chronicles
Johannesburg +27 (0) 11 530 5000
Cape Town +27 (0) 21 431 7000
Validating email against database, please wait...
Validating email: please wait...
Email verified: Please click the confirmation link sent to your mailbox, also check junk/spam folder. If you no longer have access to this email address or haven't received the verification email then email
Email verified: You are being redirected to manage your subscription
Email could not be verified: Please wait while you are redirected to the Subscription Form
Unanticipated error: Saving your CRM information Subscription Form