The gain on disposal of depreciable assets may be carried over to a special tax deferral reinvestment reserve but must then be deducted from the acquisition cost of the later acquired assets. However, capital gains realised on disposal of shares qualifying for the participation exemption are tax exempt ( see Dividend income below). Capital gainsĬapital gains are taxed as ordinary income. There is no requirement of conformity between commercial/financial and tax reporting. The LIFO system may be used for commercial/financial and tax purposes. Cost may be determined on the basis of first in first out (FIFO), last in first out (LIFO), base stock, or average cost. In general, stock/inventory is stated at the lower of cost or market value.
