No 3 of the LSJ . It could strike fear into the heart of many lawyers. The reality however may not be so bad as you might think. To find out what the damage really is let's do the numbers and see how much tax is actually involved.
Capital gains tax only arises on the realisation of an asset.
A profit which takes many years to accumulate will be taxable in one year. The Tax Act recognises that the progressive tax rate would apply unfairly to this bunching of income without there being some adjustment. The Act makes an adjustment to the tax rate payable on all income to cushion the capital gains tax blow. The adjustment calculation is known as averaging. It is not possible to state the averaging calculation simply.