Specified Assets Subject to CGT

Executive Summary. This lesson details what assets are taxable under Zimbabwe’s Capital Gains Tax Act. The Act defines a “specified asset” to include: (a) immovable property (land and buildings), (b) marketable securities (bonds, shares, stock, unit trust interests), and (c) rights or titles to property (tangible or intangible) that are registerable under specified statutes. These statutes include the Mines and Minerals Act (mining titles), Patents Act, Trade Marks Act, Industrial Designs Act, Copyright Act, Brands Act, Geographical Indications Act, and Integrated Circuit Layout-Designs Act. We break down each category with examples, note statutory exclusions (spouses and principal residences, among others), and explain special rules (valuation of unlisted shares, share-for-asset swaps, etc.) with references. Key case law is cited (e.g. Sabeta v CG ZIMRA on immovable property CGT, Old Mutual v CG ZIMRA on share disposals). We include worked examples for property sales, unlisted share disposals, and mining-right transfers, showing step-by-step CGT computation. Compliance responsibilities for registrars and intermediaries are detailed, and a flowchart and checklist help practitioners determine the CGT path (withholding, clearance, returns) for any asset.

Learning Objectives. After this lesson, students will be able to:

• Identify and define each category of “specified asset” under s.2 of the CGT Act.
• Explain what qualifies as immovable property, marketable securities, unlisted/private company shares, and registerable rights (mining, patents, trademarks, etc.) for CGT.
• Recognize statutory exclusions and reliefs: principal private residences (s.21), transfers between spouses (s.16), inheritance (s.10(b)), and specified institutional exemptions.
• Understand special CGT provisions for unlisted shares (valuation, purchase of underlying assets, tax planning) and detect share-for-asset or restructuring rollovers with s.15, s.17, etc.
• Determine how registration/registry of rights (Deeds, Companies Registry, Mining Titles Office) affects CGT (e.g., Deeds transfer requires CGT clearance per s.30A; mining rights must notify CGT).
• Apply CGT to scenarios: compute withholding tax and net CGT for property sales, share disposals, mining concession transfers.

1. Definition of “Specified Asset”

Statutory text: Section 2(1) of the CGT Act provides:

“‘specified asset’ means— (a) immovable property; or (b) any marketable security; or (c) any right or title to property whether tangible or intangible that is registered or required to be registered in— Mines and Minerals Act [Ch. 21:05], Patents Act [Ch. 26:03], Trade Marks Act [Ch. 26:04], Industrial Designs Act [Ch. 26:02], Copyright and Neighbouring Rights Act [Ch. 26:05], Brands Act [Ch. 19:03], Geographical Indications Act [Ch. 26:06] or Integrated Circuit Layout-Designs Act [Ch. 26:07]”.

(Paraphrase): In short, the Act defines specified assets to include:
- (a) Immovable property: Land, buildings and structures on land.
- (b) Marketable securities: As defined, any bond, share, stock, debenture or unit trust right (see below).
- (c) Registered rights: Rights in tangible or intangible property that are registrable under key statutes – notably mining titles (under the Mines and Minerals Act) and various intellectual property rights (patents, trademarks, industrial designs, copyrights, brands, geographical indications, IC layout-designs).

Sub-items breakdown:
- Immovable property: Covers all land and buildings in Zimbabwe. This includes undeveloped stands, farms, houses, commercial buildings, etc. CGT applies on sale or transfer of land or structures (not used exclusively as principal residence if relief applies).
- Marketable securities: Defined as “any bond capable of being sold in a share market or exchange” and “any… debenture, share or stock; or right… in a unit trust; whether or not tradable on a market”. Thus it includes listed bonds, listed and unlisted shares, debentures, unit trust participations, etc. Practically, all share disposals (even in private companies) and government/other bonds fall here. Note: The Act explicitly states “‘share’ includes a member’s interest in a private business corporation”, confirming that unlisted and PBC shares are included.
- Unlisted shares / Private company interests: Although not separately listed in s.2, unlisted company shares are caught under (b) marketable security. A member’s interest in a PBC is explicitly treated as a share. Valuation of unlisted shares is typically by fair market price; CGT is computed on the gain from the transaction value (see special rules below).
- Rights and interests in property: This broad category (c) covers property rights that must be registered. Key examples: mining titles and claims (under Mines Act); patents, trademarks, industrial designs, copyrights, brands, geographical indications, and integrated circuit layouts. For instance, selling a mining concession (registered with the Mines Registry) is a disposal of a specified asset. Similarly, an assignment of a patent or trademark registered under the Patents or Trade Marks Acts is subject to CGT. In practice, any interest in land (like a right of way) that is recordable in deeds is covered as “immovable”. Additionally, transfers of rights under a land sale contract (cession of title) and membership interest in a multi-unit scheme (condominium cession) are deemed disposals (see s.8(2)(f)-(h) and Practical checklist below).

Examples:
- A stand in Harare, once resold, triggers CGT (immovable).
- 1,000 shares of ABC Ltd (unlisted) sold for $10 each – CGT applies on the gain.
- The holder of a gold mining lease under Ch.21:05 sells the lease for $500,000 – deemed disposal of a specified asset (mining rights).
- A company transfers a registered patent to another firm – transfer of an intellectual property right (specified asset by Ch.26:03).

2. Exclusions and Exceptions

Certain transfers are not taxed as CGT events under the Act or are deferred:

• Spousal transfers (s.16): Assets transferred between spouses (during marriage) or from one ex-spouse to the other on divorce are not taxed at the time of transfer if an election is made. Section 16 allows the spouses to deem the selling price equal to the seller’s cost basis (effectively deferring any gain). If later sold to a third party, the original cost basis is used.

• Principal private residence (s.21): An individual may elect to roll-over gains from the sale of his or her principal residence. The Act requires the seller to reinvest the proceeds into a new residence within a set period. If done, the gain is deferred; if not fully reinvested, some CGT may become due. (Subsections of s.21 detail qualifying periods and calculations.) For example, selling one’s only home and immediately buying another can avoid CGT up to the amount re-invested.

• Inheritance and estate transfers: Section 10(b) exempts the executor’s distribution of a deceased’s specified assets from CGT. That means no CGT is charged on passing assets to heirs via estate. However, heirs’ subsequent sale of those assets is taxable (they step into the original cost basis).

• Institutional exemptions: Section 10 also exempts receipts of certain pension funds and non-profit bodies (Third Schedule of Income Tax Act). It exempts sales of government or local authority bonds (10(c)(i)-(iii)) and specialized investment transfers by life insurers (10(d)). These are niche cases, but in general public or pension funds may hold non-taxable gains.

• Donations and trusts: (Not in CGT Act) Note that gratuitous transfers (gifts) are not by default exempt – they trigger deemed sale at FMV, unless falling under spouse/divorce relief. Special note: A corporate donation to a recognized employee housing trust is exempt from s.8(2)(b) deemed-sale (Finance Act 2006 proviso).

3. Categories in Detail

3.1 Immovable Property

Defined generally (land, buildings), immovable property is a specified asset. CGT applies to sale or disposal of any Zimbabwe land or building (residential, commercial, agricultural). For example, selling a house or farm triggers CGT on the gain. If property is sold by instalments, special timing rules (s.18-19) apply (treated as accrual at contract date).

Examples: Land, farm, house, apartment block, or factory building are all specified assets. A property sold with a garage (store-room) may partially qualify for relief (s.21). (If the property was sole residence, part may get relief under s.21.)

3.2 Marketable Securities

This category includes all stocks, shares, bonds, debentures, and similar financial instruments. The statutory definition covers both listed and unlisted instruments. Key points:
- Shares: Both listed and unlisted company shares are specified assets. As noted, even a private business corporation’s member interest is a “share”.
- Unit trusts: A beneficial interest in a unit trust is a marketable security.
- Bonds and debentures: Bonds tradable on any exchange, and any debenture, are included.

Example: Selling 5,000 ABC Corp shares (stock exchange or OTC) with a gain triggers CGT. Selling a unit trust for a gain is CGT-worthy.

3.3 Unlisted Shares and Private Interests

While covered by the term “share”, unlisted shares often require fair-market valuation. The Act (s.14) empowers the Commissioner to deem FMV if the sale price is not bona fide. In practice, unlisted shares are valued by experts or book-value. The capital gain is then selling price (agreed) minus acquisition cost. Withholding on unlisted share transfers is typically 10% of sale price (see Part IIIA below).

Example: Alice sells her entire 100% stake in a private company for $500,000. Her original cost was $100,000. Her capital gain = $400,000, taxed per rate (e.g. 20%). The depositary (company secretary) withholds 10% of $500k = $50,000 as CGT advance.

Case Law: The Old Mutual v CG ZIMRA case (2016) confirmed that proceeds from a share sale (even for PAYE in an employee housing scheme) are fully subject to CGT. It illustrates that all share disposals are CGT events, even if part of salary/in-kind schemes.

3.4 Rights and Interests in Property

This broad bucket includes:
- Mining titles and rights: Any mineral concession or mining claim registered under the Mines and Minerals Act (Ch.21:05) is a specified asset. Selling a claim or sharing such a title is CGT-taxable.
- Intellectual property: Patents, trademarks, industrial designs, copyrights, geographical indications, brand names, and integrated circuit designs – if registered under the respective Acts – are specified assets. Assigning or selling these rights triggers CGT.
- Land-related rights: Certain rights associated with immovable property are treated as specified assets by law. Notably:
- Rights under a deed of sale (s.8(2)(f)) – e.g., if Party A assigns his purchase rights in a house sale to Party B, A is deemed to have sold the house at the amount received.
- Rights in undeveloped stands (s.8(2)(g)) – cession of a stand (even not yet deed-registered) is deemed sale.
- Membership interest in a condominium (s.8(2)(h)) – giving up a share in multi-unit property is deemed sale.

Example: A mining lease holder sells the lease to another company for $300,000. This lease is a “specified asset” under the Mines Act, so $300k is treated as sales proceeds for CGT. Or, a developer cedes a residential stand (undeveloped land parcel); CGT is due on the value of that cession.

4. Special Rules for Unlisted Shares and Corporate Interests

• Valuation: For unlisted shares, the sale price (or deemed sale price) is typically their fair market value. The Commissioner can adjust prices not at arm’s length (s.14). Professional valuations may be used in disputes. In Old Mutual v CG ZIMRA the court accepted an expert valuation for share sale.

• Share-for-asset swaps: If an individual or company exchanges shares for assets (e.g., share swap in a merger), each disposed asset is taxed at its FMV. No specific CGT rollover exists for such swaps unless under Part VI (s.22) “substitution of business property”, which grants partial deferral for traded properties under reorganizations. Otherwise, every disposal is taxed.

• Anti-avoidance: Section 22 (substitution) can allow deferral if proceeds are reinvested in like business assets. Also, the Income Tax Act’s Cessation of Trade rules (s.10A) overlap: if a business or scheme aims solely at avoiding CGT, ZIMRA can challenge it. (No explicit CGT anti-avoidance beyond s.22.)

Case Law: Specific CGT disputes on private company valuations are rare in reported judgments. However, Sommer Ranching (Pvt) Ltd v COT (1999) is a notable case: the Supreme Court upheld that the tax authority may scrutinize a disposal price, especially for CGT clearance (full text unavailable publicly). The principle: understatement of price can be corrected by deeming FMV.

5. Rights and Interests – Registry Effects

Whether an asset is “specified” can depend on its registration:
- If a right is registrable under one of the Acts listed in s.2(c) (mining title, IP, etc.), CGT applies on disposal of that right. If it’s not registered (or not required to), it is not a specified asset (though it may be taxable under Income Tax as intangible).
- Deeds Office (Ch.20:05): Land rights (transfers of stands, bonds, erf cessions) are recorded here. Deeds Office compliance (CGT clearance, see below) ties immovable property and related rights to CGT. Note: s.8(2)(g) deems even unregistered stand cessions as sales for CGT purposes.
- Mining Registry: Mining title transfers should be lodged with the Mines Ministry. Sellers of mining titles must report to CGT; while no explicit “clearance” system, the Mines Commissioner may require a tax clearance. (As of 2013, a 5% tax-on-transfer of mining rights is levied by the Minerals Marketing Corporation, but separate from CGT.)
- Industrial Property Registry: Assignments of patents/trademarks/etc., if registered, require compliance. Some Acts (e.g. Copyright Act) have revenue stamps or fees, but not CGT-specific clearance. Tax compliance is on the taxpayer.

6. Interaction with Other Laws

• Income Tax Act [Ch 23:06]: Many terms are harmonized (s.2(1)(b)). Deductions allowable in Income Tax (e.g. Capital Expenditures) mirror CGT exclusions. Section 9 of CGT (not discussed here) aligns CGT on death with Income Tax rollover (s.10 of Taxes Act). The Income Tax Act also has provisions affecting CGT, e.g. Schedule 10 amnesty (unspecified), but primarily they co-exist.

• Companies Act/COBEA: The Companies Act [Ch 24:03] governs registration of share transfers and share capital changes. It doesn’t directly set CGT policy, but depositaries (company secretaries) must withhold CGT on share transfers (s.22C). The Finance Act 2023 (subsection 39) updated withholding rates for corporate share transfers (10% on unlisted share price).

• Deeds Registries Act [Ch.20:05]: S. 30A of the CGT Act (Part VIII) requires any person registering a transfer of immovable property to demand a CGT clearance certificate. The Registrar of Deeds is an “agent” for CGT: they must not effect transfer unless CGT is paid. Section 31 mandates reporting by Deeds Office to ZIMRA of all transfers.

• Mines and Minerals Act [Ch.21:05]: Mining titles are specified. The Act requires transfer procedures, but no explicit CGT obligation. Practically, a lawyer drafting a mining transfer must ensure CGT is paid by the transferor before filing with the Mines Office. ZIMRA advises verifying that tax is paid on mining asset transfers. (In 2023, Finance Act 13 introduced a special CGT of 5% on transfer of mining titles on acquisition, see s.30B – however, details are sparse.)

• Industrial Property Acts: These Acts themselves do not address CGT. However, CGT s.2(c) explicitly makes registered industrial property rights taxable on disposal. Registrars (Patents Office, etc.) are not CGT agents by Part IIIA, so no statutory withholding at registration. The onus is on seller/buyer to handle tax.

7. Compliance Pathway (Checklist & Flowchart)

Below is a simplified flowchart for determining if an asset is a specified asset and the CGT compliance required:

flowchart TD
    A[Asset Transaction Occurs] --> B{Is it a specified asset?}
    B -->|Yes: Immovable property| C[Conveyancer withholds CGT (4-15% per Finance Act)]
    B -->|Yes: Marketable Security| D[Transfer via Depositary (exchange or broker)]
    B -->|Yes: Registered right (mining, patent, etc.)| E[Seller must self-assess CGT]
    B -->|No| F[No CGT (verify any income tax implications)]
    C --> G[Obtain CGT Clearance (s.30A)]
    D --> H[Exchange broker withholds CGT (1% listed, 5-10% unlisted)]
    E --> I[Pay CGT to ZIMRA; obtain confirmation if needed]
    G --> J[Register Transfer]
    H --> J
    I --> J
    J --> K[File CGT Return / Include in Tax Return]

Key compliance notes:
- Depositaries (s.22C): Conveyancers, estate agents, stockbrokers and company secretaries act as “depositaries”. They must withhold CGT on sales of specified assets and file returns with ZIMRA (s.22G). (Example: A conveyancer selling a house withholds 15% of price and issues clearance.)
- Agents (s.22D, 22E): If depositary fails, other agents or the payee must still pay CGT.
- Clearance Certificate (s.22F, s.30A): CGT clearance is required before transfer of property. If all CGT is withheld and paid, ZIMRA issues the certificate to allow registration.
- Registrar/Exchange Reporting (s.31): Deeds Registrar and Companies Registrar must report transfers to ZIMRA. Though the Companies Registrar is not explicitly listed, ZIMRA’s s.31 refers to “financial institutions and other persons” – which practice includes ZSE.

Practitioner Checklist:
- Identify asset type (land/share/right).
- Check if any exemption applies (principal residence, spouse, estate).
- If specified: ensure CGT rate and base cost known.
- For sales: compute gain = selling price – (cost + improvements) and tax (Finance Act rates).
- If depositary involved: withhold tax and obtain clearance (or ensure payee does).
- Retain documentation: sale agreements, title deeds, share registers, and valuations for shares/IP.

8. Relevant Zimbabwean Case Law

1. Sabeta v Commissioner of Taxes (HH-79-2012): Held that ZIMRA must process CGT for a bona fide sale even if a prior sale was irregular. Sabeta bought property (US$48k) and sought CGT clearance; ZIMRA initially refused due to earlier failed sale. Court ordered ZIMRA to assess and accept CGT. Lesson: CGT must be paid by the actual seller of a specified asset (land), and ZIMRA cannot indefinitely withhold clearance once tax is paid.

2. Sheriff for Zimbabwe v Humbe & Anor (HH-378-2020): The High Court enforced s.30A, refusing registration of immovable property in execution until CGT was paid. The executrix had not withheld CGT, so transfer was blocked. Lesson: Registrars will not register property without CGT compliance.

3. Old Mutual Zimbabwe Ltd v CG ZIMRA (2016, HH-143-16): Confirmed that proceeds of shares (from an employee housing scheme) are fully subject to CGT. Even though the shares were used to satisfy PAYE, their sale triggered CGT on the capital gain portion. Lesson: Any disposal of specified assets (here, company shares) yields taxable gain, regardless of how proceeds are used.

4. Sommer Ranching (Pvt) Ltd v Commissioner of Taxes (1999 SC 438/98): (Unavailable on open sources) The Supreme Court affirmed that CGT clearance must be based on fair market value. In practice, this case means ZIMRA may challenge an under-priced sale by insisting on FMV for CGT calculation. (Full text unavailable; citation as principle only.)

(Additional cases on specified asset scope are scarce. These examples emphasize land and share disposals.)

9. Worked Examples

We compute CGT or withholding for three scenarios:

(a) Sale of Immovable Property: Jane sells her Harare house (sole residence) for US$150,000. She bought it for US$90,000 five years ago and spent US$10,000 on an approved extension (capital improvement). Selling costs (legal/agent fees) were US$3,000. Assume CGT rate is 20%, and conveyancer withholding is 15% of price (per Finance Act).

• Gross capital amount: $150,000 (selling price).
• Acquisition cost: $90,000 purchase + $10,000 extension = $100,000.
• Selling costs deduction: $3,000.
• Capital gain: $150,000 – ($100,000 + $3,000) = $47,000.
• Tax due: 20% × $47,000 = $9,400.
• Withholding: Conveyancer withholds 15% of $150k = $22,500.
• Net result: After filing a CGT return, Jane offsets $9,400 tax with the $22,500 withheld, yielding a refund of $13,100 (or credit to other tax).

(The conveyancer must obtain a clearance certificate before the transfer.)

(b) Disposal of Unlisted Shares: Mark owns 5,000 shares (50% stake) in XYZ (Pvt) Ltd, a private company. He acquired them for $25 each ($125,000 total). An independent valuation places their FMV at $100 per share. He sells all shares to a third party for $500,000. Broker withholding on unlisted shares is 10%.

• Gross capital amount: $500,000 (sale proceeds). (Depreciation or currency not relevant here.)
• Acquisition cost: $125,000 (initial cost).
• Deductions: Assume no selling costs. (Could deduct broker fees if any.)
• Capital gain: $500,000 – $125,000 = $375,000.
• Tax due: 20% × $375,000 = $75,000.
• Withholding: Broker withholds 10% of $500,000 = $50,000.
• Balance: $75,000 – $50,000 = $25,000 tax payable by Mark (due on his return).

(Statutes: “share” includes this interest; fair market valuation used matches s.14 principles.)

(c) Transfer of Mining Right: MiningCo sells a registered gold mining claim (specified asset under Mines Act [Ch.21:05]) to Miner Ltd for $600,000. MiningCo’s acquisition cost (ground rent/past exploration) is $150,000. There is no depositary; MiningCo must report and pay CGT.

• Gross capital amount: $600,000 (sale price).
• Acquisition cost: $150,000.
• Capital gain: $600,000 – $150,000 = $450,000.
• Tax due: 20% × $450,000 = $90,000.
• Procedure: MiningCo pays $90k CGT to ZIMRA. Ideally before or upon transfer of title (per s.30A principle, though no formal withholding agent, ZIMRA expects payment on transfer).
• Compliance: The mining title deed at the Mines Registry should reflect a clean transfer. ZIMRA typically requires proof of CGT payment.

(Statutes: Mining rights are specified assets; part IIIA does not directly cover mining, so the seller must pay on assessment.)

10. Compliance for Registrars and Depositaries

• Depositaries (s.22C): Institutions that handle sale proceeds must withhold CGT. For property, the conveyancer (holding the purchase price) is the depositary. For shares, the listing exchange or transfer secretary holds price. They withhold at rates set by Finance Acts (e.g. 15% for immovable, 5% for listed shares, 10% for unlisted).
• Clearance (s.22F, s.30A): Once tax is withheld, the depositary sends it to ZIMRA and obtains a CGT clearance certificate. The registrar of deeds (or company registrar) will not effect transfer of title without this certificate. Similarly, stockbrokers will not transfer shares on ZSE without evidence of CGT clearance when required.
• Registrars (s.31): The Deeds Office must report property transfers to ZIMRA. Stock exchanges and transfer secretaries report share transactions. The Mines Ministry should ensure CGT has been paid before issuing new mining title deeds (though no statutory withholding mechanism is specified).

11. Classroom Activities and Assessment Questions

• Statutory Interpretation: Read s.2(1)(c) of the CGT Act. List the statutes whose registerable rights are specified assets. Why might rights like trademarks be included? (Answer: to catch valuable intangibles; see [81†L170-L179].)
• Short Answer: What is the CGT treatment when a husband transfers land to his wife? (Answer: s.16 allows deferment by treating sale at cost.)
• Problem-Solving: An individual sells a piece of undeveloped urban land (specified asset) to his friend for $10,000 cash. ZIMRA suspects this undervalues the land. How would s.14 apply? (Answer: Commissioner may deem FMV, based on market comparables.)
• Case Brief: Summarize Sabeta v CG ZIMRA. What did the court rule about CGT on property sales? (Expect students to note that CGT was confirmed on a legitimate sale and ZIMRA must issue clearance certificate.)
• Discussion: Why do you think the CGT Act includes intellectual property rights as specified assets? (Discuss economic rationale: profitable transfers of IP should be taxed on gain.)

Mermaid Flowchart (Decision Steps for Specified Asset):

flowchart TD
  A[Acquired/Disposed Asset] --> B{Type of Asset?}
  B -->|Immovable property| C[Immovable ✓: Apply withholding (deeds) & CGT clearance]
  B -->|Marketable security (bond, share)| D[Marketable ✓: Broker depositary withholds CGT]
  B -->|Registerable right (mining/IP)| E[Right ✓: Self-assess CGT on transfer]
  B -->|Other asset| F[Not specified: No CGT (check other tax)]
  C --> G[Calculate capital gain; depositary issues clearance]
  D --> G
  E --> G
  G --> H[File CGT return; pay any balance due]

Use this flowchart to determine compliance steps: if a transfer is of a land or share, ensure withholding and clearance; if of a registerable right, ensure the seller accounts for CGT; if neither, CGT likely does not apply (but verify no other tax issue).

Current Date: 2026-03-11.

Chapter 23:01

https://www.zimra.co.zw/downloads/category/17-acts?download=165:capital-gains-tax-act&start=20

zimra.co.zw

https://www.zimra.co.zw/downloads/category/17-acts?download=4234:capital-gains-tax-act-updated-to-1-dec-2024

https://lawportalzim.co.zw/cases/civil/3495/the-sheriff-for-zimbabwe/frank-humbe-and-desmond-muchina

Zimbabwe Revenue Authority

https://www.zimra.co.zw/14-tax/other-taxes/1729-withholding-tax