This lesson teaches the arithmetic engine of Zimbabwe's capital gains tax: how a disposal of a specified asset is converted, line by line, into a number on which tax is charged. Every other CGT lesson — exemptions, deductions, the principal private residence, rates, withholding — ultimately feeds into, or draws out of, the computation set out here. Master this and the rest of the course becomes bookkeeping.

The governing law is the Capital Gains Tax Act [Chapter 23:01], principally Section 8 (which defines the three building-block amounts), Section 11 (the deductions allowed in arriving at the gain), Section 12 (deductions barred), and Section 13 (damage and destruction), read together with the Finance Act [Chapter 23:04] for the rate (Section 38) and the special foreign-currency machinery (Section 39A). The charge itself is imposed by Section 6 of the CGT Act and quantified "in accordance with the Finance Act" by Section 7.

The computation is a three-stage funnel. First, the "gross capital amount" (Section 8(1)(a)) — everything received, accrued or deemed to accrue from a Zimbabwean-source sale of specified assets, excluding anything already proved to be income-tax "gross income" (so CGT and income tax are mutually exclusive), but including any earlier Section 11(2) deduction that has since been recovered or recouped. Second, subtract the Section 10 exemptions to reach the "capital amount" (Section 8(1)(b)). Third, subtract every Section 11 deduction to reach the "capital gain" (Section 8(1)(c)) — and if the deductions exceed the capital amount, the shortfall is an "assessed capital loss" (Section 2) carried forward under Section 11(3).

The allowable deductions in Section 11(2) are: (a) the acquisition or construction cost of the asset; (b) the cost of additions, alterations or improvements (with a vital property-company look-through — improvements to land owned by a company are treated as expenditure on its shares); (c) the inflation allowance, an indexation uplift built from the All Items Consumer Price Index; (d) selling costs directly incurred on the disposal; (e) bad debts previously brought into a capital amount; (f) and (g) taxed legal costs of a successful appeal to the High Court/Special Court and the Supreme Court respectively; and (h) a de minimis wipe-out where the year's total capital gains are US$50 (or the redenominated ZWL equivalent) or less.

Two date thresholds and one currency rule dominate the modern computation. The rate under Finance Act Section 38 turns on the acquisition date: an asset acquired before 22 February 2019 is taxed at 5% of the gross capital amount (a turnover-style charge on which Section 11 deductions are largely irrelevant), while an asset acquired on or after 22 February 2019 is taxed at 20% of the capital gain (so the Section 11 computation is everything). For gains that arise in foreign currency (the overwhelming majority today), Finance Act Section 39A(9a) rewrites the deduction list: only Section 11(2)(a), (b), (d), (e), (f) and (g) survive, and the CPI inflation allowance in Section 11(2)(c) is replaced by a flat allowance of 2½% of cost for each year of ownership. Worse, Section 39A(10) denies all Section 11 deductions for any asset acquired between 1 February 2009 and 22 February 2019 and disposed of afterwards — a severe trap that taxes something close to the full proceeds.

This lesson walks each provision clause by clause, defines every term, and runs full USD computations for an individual, an SME and a large corporate, including an assessed-loss case, a pre-2019 "gross" case, and a withholding-reconciliation. It builds directly on Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal… (the charge and the funnel), Specified Assets Under Zimbabwe Capital Gains Tax Law (what is inside the base), Allowable Deductions When Calculating CGT and Capital Gains Tax Exemptions (the inputs to the funnel), and feeds How to Calculate Capital Gains Tax (Step-by-Step), Capital Gains Withholding Tax and CGT on Property Sales.

Capital gains tax is, at bottom, a tax on a single number — the capital gain — multiplied by a single rate. Everything a practitioner does in a CGT engagement is in service of getting that number right: identifying whether there is a disposal at all, whether the thing disposed of is a "specified asset", whether any exemption removes the gain, which costs may be subtracted, how to index for inflation, and finally which rate and currency apply. The present lesson is where all of those threads are pulled together into an actual calculation.

To see why this matters, recall the basic shape of the tax established in Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal…. The charging section, Section 6 of the Capital Gains Tax Act [Chapter 23:01], provides that "there shall be charged, levied and collected throughout Zimbabwe … a capital gains tax in respect of the capital gains, as defined in this Part, received by or accrued to or in favour of any person during any year of assessment, other than a capital gain so received or accrued prior to the 1st August, 1981." Three things follow immediately. The tax bites on a "capital gain" — a defined term, not a loose notion of profit. It bites per year of assessment, so the computation is an annual exercise. And it has a hard start date of 1 August 1981, the date the Act commenced; gains accrued before then are simply outside the charge.

Section 7 then tells us how to quantify the liability: "the capital gains tax with which a person is chargeable shall be calculated in accordance with the Finance Act [Chapter 23:04] by reference to — (a) the capital gains of the person in the year of assessment; and (b) the rate of capital gains tax fixed from time to time in that Act." This is the same two-statute design that runs through the whole of Zimbabwean tax law (see Introduction to Taxation in Zimbabwe and Sources of Zimbabwean Tax Law): the permanent Act ([Chapter 23:01]) supplies the structure — what a gain is and how it is built — while the annual Finance Act ([Chapter 23:04]) supplies the rate. Because the rate lives in the Finance Act, it is always year- and currency-specific, and a computation is incomplete until you have checked the rate in force for the relevant year of assessment.

For learners and examiners, this is the most computational topic in the CGT syllabus and therefore the most heavily tested. ZIMRA audit interest is also highest here, because the computation is where taxpayers make the most consequential mistakes: claiming income-tax-style deductions that the CGT Act does not allow, mis-indexing for inflation, forgetting that the rate may be charged on gross proceeds rather than the gain, or applying deductions to a foreign-currency gain when Section 39A forbids them. A confident grasp of the funnel protects against every one of these.

The defining provision — Section 8(1)

Section 8 of the Capital Gains Tax Act [Chapter 23:01] is headed "Interpretation of terms relating to capital gains tax", and its subsection (1) supplies the three terms that are the computation:

(a) "gross capital amount" "means the total amount received by or accrued to or in favour of a person or deemed to have been received by or to have accrued to or in favour of a person in any year of assessment from a source within Zimbabwe from the sale on or after the 1st August, 1981, of specified assets excluding any amount so received or accrued which is proved by the taxpayer to constitute 'gross income' as defined in subsection (1) of Section 8 of the Taxes Act and includes any amount allowed to be deducted in terms of subsection (2) of section eleven which has been recovered or recouped".

There is a proviso: "in the case of bodies referred to in subparagraphs (a), (c) and (f) of paragraph 2 of the Third Schedule to the Taxes Act an amount so received or accrued shall, notwithstanding that it is so proved to constitute 'gross income' as so defined, constitute a gross capital amount." Annotated to this paragraph in the source Act is Old Mutual Zimbabwe Ltd v Commissioner-General of ZIMRA 16-HH-143, confirming that proceeds of shares sold by employees to meet PAYE obligations under an indigenisation employee share trust constituted an amount liable for CGT.

Five elements deserve separate emphasis because each can change the number:

• "Total amount received by or accrued to or in favour of" — the gross figure, before any cost. "Received by or accrued to" is the same accrual language used in income tax (see Gross Income Definition and Case Law): an amount accrues when the taxpayer becomes entitled to it, whether or not it has been paid.
• "Or deemed to have … accrued" — the deeming provisions in Section 8(2) (below) pull non-sale disposals, expropriations, executions, maturities and stand/condominium cessions into the net.
• "From a source within Zimbabwe" — CGT is, like income tax, source-based, not residence-based. A non-resident selling Zimbabwean immovable property is within the charge; a resident selling foreign property is not (see CGT on Cross-Border Asset Transfers).
• "From the sale … of specified assets" — only the three classes of "specified asset" defined in Section 2 (immovable property; marketable securities; registered intellectual-property and mining rights) are in the base. Everything else is outside CGT (see Specified Assets Under Zimbabwe Capital Gains Tax Law).
• The "excluding … gross income" carve-out — the boundary between income tax and CGT. If an amount is proved by the taxpayer to be ordinary income, it is taxed under the Income Tax Act and drops out of the gross capital amount; CGT and income tax are mutually exclusive (subject to the Third-Schedule-body proviso). This is the same boundary studied in Capital vs Revenue Receipts.
• The "recovered or recouped" inclusion — if a deduction once allowed under Section 11(2) is later recovered (for example, a bad debt deducted under (e) that is afterwards paid), the recovery is added back into the gross capital amount. This mirrors the recoupment logic of income tax.

(b) "capital amount" "means the amount remaining of the gross capital amount of any person, after deducting therefrom any amounts exempt from capital gains tax under this Act." This is the second rung of the funnel: gross capital amount minus the Section 10 exemptions (covered in Capital Gains Tax Exemptions).

(c) "capital gain" "means the amount remaining, after deducting from the capital amount of any person all the amounts allowed to be deducted from a capital amount under this Act." This is the third and final rung: capital amount minus the Section 11 deductions.

Finally, Section 2 defines an "assessed capital loss" as "the amount by which the sum of the deductions to be made … exceeds [the] capital amount" — the negative result of the funnel, carried forward under Section 11(3).

The deeming and currency rules — Section 8(2)

Section 8(2) elaborates the definition of "gross capital amount". Paragraph (a) deals with exchange-rate variation: where the amount actually received (in Zimbabwean currency) differs from the amount that had accrued because the rate of exchange moved, the figure brought to account is the amount received, and if accrual and receipt fall in different years the adjustment is made in the year of accrual. Paragraphs (b) to (h) are the deemed-sale rules already catalogued in Capital Gains Tax in Zimbabwe: Introduction, Purpose and Legal… and Specified Assets Under Zimbabwe Capital Gains Tax Law: (b) a disposal otherwise than by sale (gift, distribution in specie) is deemed a sale at the fair market price the Commissioner opines (annotated R (Pvt) Ltd v ZIMRA 19-HH-792; with a proviso excluding a company's donation of immovable property to an approved employee housing trust); (c) expropriation is a deemed sale at the compensation paid (with a Global Compensation Deed carve-out, substituted by Finance Act 13/2023 w.e.f. 1 January 2024); (d) sale in execution of a court order; (e) maturity or redemption of a specified asset; (f) transfer of rights under a deed of sale; (g) transfer of rights in a residential, commercial or industrial stand; and (h) relinquishment of a membership interest in a condominium (paragraphs (g) and (h) inserted by Act 1/2014 w.e.f. 1 January 2014). Each fixes the amount that enters the gross capital amount when there is no ordinary cash price.

Section 9 completes the timing picture: a capital amount "shall be deemed to have accrued to a person in the circumstances set out in subsections (1) and (2) of Section 10 of the Taxes Act", which apply mutatis mutandis. In other words, CGT borrows the income-tax deemed-accrual machinery wholesale.

The deductions — Section 11

Section 11(1) opens the deduction code: "For the purposes of determining the capital gain of any person there shall be deducted from the capital amount of such person the amounts allowed to be deducted in terms of this section." A proviso handles exchange-rate variation on the expenditure side, mirroring Section 8(2)(a): where the amount actually paid in Zimbabwean currency differs from the liability incurred because the rate moved, the amount actually paid is deducted, with the adjustment made in the year the liability was incurred if the two events straddle years.

Section 11(2) lists the deductions. (The exhaustive clause-by-clause treatment is in section C below; here is the statutory skeleton.) An editor's note flags that, "since 30th January 2009", the operative inflation allowance is found in Section 39A para 9(b) of the Finance Act — a signpost to the foreign-currency regime discussed below.

• (a) acquisition or construction cost of the assets sold (excluding expenditure already deductible for income tax), with special rules for inheritance and non-purchase acquisitions before and after 1 August 1981;
• (b) cost of additions, alterations or improvements, with the property-company look-through deeming improvements to a company's land to be expenditure on its shares;
• (c) the inflation allowance, an amount determined by a CPI-based formula (substituted by Act 29/2004 from 1 January 2005, again by Act 12/2006 from 1 January 2007, and repealed and substituted by Finance Act 7/2021 w.e.f. 31 December 2021);
• (d) expenditure directly incurred for or in connection with the sale;
• (e) bad debts previously brought into a capital amount;
• (f) taxed High Court / Special Court appeal costs on a successful (or substantially successful) appeal;
• (g) taxed Supreme Court appeal costs on a wholly or substantially favourable decision;
• (h) a de minimis deduction equal to the year's total capital gains where that total is "[zw$25 000 or] US$ 50 or less".

Section 11(3) deducts any assessed capital loss of the previous year, subject to three provisos: a loss-trafficking bar (a change in shareholding effected mainly to exploit a company's assessed capital loss disqualifies the pre-change loss); an insolvency bar (an insolvent or assigning taxpayer cannot carry the loss forward); and a PBC-conversion carry-over (a loss survives conversion between a company and a private business corporation). Section 11(4) bars double deduction of the same amount and requires the taxpayer to elect the provision under which to claim where two would otherwise apply in the same year. Section 11(5) gives a lessor previously charged income tax on lease premiums a deemed Section 11(2)(a)/(b) expenditure equal to the amount so taxed. Section 11(6) gives a deed-of-sale transferee a deemed acquisition cost equal to the amount payable under the deed.

Section 12 is the barring provision: "Notwithstanding the provisions of section eleven, no deduction shall be made in respect of expenditure on or in relation to specified assets the sale of which is exempt from tax." If the gain is exempt, its costs cannot be claimed against other gains. Section 13 deals with damage or destruction: the receipt is a deemed sale (Section 13(1)); but if it does not exceed the (a)+(b) cost base, the asset is not deemed sold and the cost base (and future (c) indexation) is reduced instead (Section 13(2)); and a two-year replacement rollover defers the charge to the extent the receipt is spent on a like replacement or on repair (Section 13(3)–(4)).

The rate and currency — Finance Act Sections 38 and 39A

Finance Act [Chapter 23:04] Section 38 fixes the rate, and it is keyed to the acquisition date of the asset:

• (a) asset acquired before 22 February 2019: 5% — "$0.05 for each dollar of the gross capital amount" (ZWL case, Section 39A(9)(a)) or "US$0.05 for each United States dollar of the gross capital amount" (foreign-currency case, Section 39A(9)(b));
• (b) asset acquired after 22 February 2019: 20% — "$0.20 for each dollar of the capital gain" (ZWL) or "US$0.20 for each United States dollar of the capital gain" (foreign currency).

Note the structural asymmetry, which is the single most important practical point in this lesson: the 5% rate is charged on the gross capital amount (effectively the proceeds), whereas the 20% rate is charged on the capital gain (proceeds net of deductions). For a pre-2019 asset the elaborate Section 11 deduction computation therefore has little effect on the tax, because the rate ignores the deductions; for a post-2019 asset the Section 11 computation is everything. The threshold date was moved over time (1 February 2009 → 21 August 2019 → 22 February 2019, the last fixed by Finance Act 7/2021 backdated), and it is the acquisition date — not the sale date — that selects the rate.

Finance Act Section 39A governs the currency of the gain and, crucially, rewrites the deduction list for foreign-currency gains:

• Section 39A(9)(a)/(b): where the gain accrues in Zimbabwean currency, tax is at the Section 38(a) rate in ZWL; where it accrues in foreign currency, tax is at the Section 38(b) rate in foreign currency — on the portion denominated in each currency (Section 39A(2) splits mixed transactions).
• Section 39A(9a): "For the purposes of determining the capital gain received … in a foreign currency, no amounts shall be deducted therefrom that are allowed … in terms of Section 11 … other than — (a) the amount referred to in Section 11(2)(a), (b), (d), (e), (f) and (g); and (b) … an amount of 2½% of the purchase price of the specified asset [for each year or part-year of ownership] and … 2½% of the cost of the additions, alterations or improvements [for each year or part-year to the date of sale]". A proviso converts ZWL-incurred expenditure to USD by a ministerial formula. In plain terms: for foreign-currency gains, the CPI inflation allowance in Section 11(2)(c) is switched off and replaced by a flat 2½%-per-year-of-cost allowance (inserted by Finance Act 7/2021, backdated to 22 February 2019).
• Section 39A(10): for an asset acquired on or after 1 February 2009 but before 22 February 2019 and disposed of after that date, "no amounts shall be deducted … that are allowed … in terms of Section 11." This denies every deduction — a punitive transitional rule (inserted by Finance (No. 2) Act 7/2019).
• Section 39A(11): a sale "purported to have been sold for Zimbabwe dollars" is presumed to be in foreign currency at USD market value unless the seller proves otherwise (inserted by Finance (No. 3) Act 13/2019).

We now walk the funnel from top to bottom, defining every term and showing each line of arithmetic.

Step 1 — Establish the gross capital amount

Define it. The gross capital amount is the total Zimbabwean-source consideration for the sale (or deemed sale) of specified assets in the year, excluding amounts proved to be income-tax gross income and including recovered/recouped former deductions.

Work it. In a straightforward cash sale, the gross capital amount is simply the selling price. Where the disposal is not a cash sale, use the Section 8(2) deeming rules:

Two recurring traps at Step 1. First, do not net the cost here — the gross amount is the whole proceeds; costs come off only at Step 3. Second, remember the income-tax exclusion: if the taxpayer is a dealer in the asset (a share trader, a property developer holding stock-in-trade), the proceeds are income, not a gross capital amount, and the transaction leaves the CGT system entirely (see Capital vs Revenue Receipts and CGT on Shares and Securities).

Step 2 — Subtract the Section 10 exemptions to reach the capital amount

Define it. The capital amount is the gross capital amount after removing every amount that Section 10 exempts. The full exemption catalogue is taught in Capital Gains Tax Exemptions; the ones most likely to appear in a computation are: amounts realised by the executor of a deceased estate (Section 10(b)); proceeds of State/local-authority/statutory-corporation loan stock (Section 10(c), annotated Commissioner of Taxes v C W (Pvt) Ltd 89-ZLR-361 and Ellis N.O. v CoT 92-SC-001); the over-55 principal private residence total exemption (Section 10(l)); the over-55 first US$1,800 of marketable-security proceeds; and the VFEX-listed securities** full exemption (Section 10(r), Act 8/2020).

Work it. Exemptions are subtracted from the gross capital amount. If the whole gain is exempt, the capital amount is nil and — by Section 12 — none of the asset's costs may be deducted against any other gain.

Step 3 — Subtract the Section 11 deductions to reach the capital gain

This is the substance of the lesson. Take each paragraph of Section 11(2) in turn.

(a) Acquisition or construction cost

The first and largest deduction is "expenditure to the extent to which it is incurred on the acquisition or construction of such specified assets as are sold during the year of assessment", other than expenditure already deductible in computing the seller's income-tax taxable income. The exclusion prevents a double benefit: you cannot deduct the same dollar once against income and again against the capital gain.

Three special cost rules deal with assets not acquired by an arm's-length purchase:

• Inheritance (Section 11(2)(a)(i)): the heir is "deemed to have incurred expenditure … equal to the amount at which the specified asset was valued in the deceased estate." The estate's valuation becomes the heir's cost base.
• Non-purchase, non-inheritance acquisition before 1 August 1981 (Section 11(2)(a)(ii)A): deemed cost equals the fair market value at the time of acquisition, as proved to the Commissioner. (Pre-Act value is recognised so that only post-1981 appreciation is taxed.)
• Non-purchase, non-inheritance acquisition on or after 1 August 1981 (Section 11(2)(a)(ii)B): deemed cost equals the amount, if any, that was included in the transferor's gross capital amount (for CGT) or gross income (for income tax) on the earlier transfer. This dovetails one person's proceeds with the next person's cost.

(b) Additions, alterations and improvements

"Expenditure … incurred on additions, alterations or improvements" to the asset is deductible, again excluding anything already deductible for income tax. The defining feature is the property-company look-through: "in the case of a capital amount arising from the sale of shares in a company which owns immovable property, any expenditure incurred by the seller on additions or alterations to the property shall be deemed to be expenditure incurred on additions to the shares." This is the same anti-avoidance idea met in Specified Assets Under Zimbabwe Capital Gains Tax Law: you cannot strip the value out of a property-holding company's shares and deny the share cost base the improvements that created that value. Note the distinction between improvements (capital — deductible under (b)) and repairs/maintenance (revenue in character — not a CGT deduction, and dealt with, if at all, under income tax).

(c) The inflation allowance (CPI indexation)

Paragraph (c) grants "an amount determined in accordance with the following formula", where:

• A = the All Items Consumer Price Index figure issued by the Central Statistics Office at the time of disposal;
• B = the All Items CPI figure in the month of effecting improvements or the month of purchase; and
• C = the purchase price of the property, or the revalued amount after including the cost of improvements or alterations.

The purpose is to ensure that only the real (inflation-adjusted) gain is taxed: by uplifting the historic cost (C) by the proportionate rise in the price index between purchase/improvement (B) and disposal (A), the allowance strips out the portion of the nominal gain that is merely currency erosion. The conventional indexation computation is deduction = C × (A − B) ÷ B (equivalently C × (A ÷ B − 1)).

Critical limitation. The CPI allowance in (c) is meaningful for gains denominated in Zimbabwean currency. For gains in foreign currency, Finance Act Section 39A(9a) switches paragraph (c) off entirely and substitutes a flat allowance of 2½% of the purchase price (and 2½% of each improvement) for every year or part-year of ownership. Because most disposals today settle in USD, the 2½%-per-year allowance is, in practice, the inflation allowance you will actually compute — the editor's note to Section 11(2) signposts exactly this ("see the inflationary allowance deductible in terms of Section 39A para 9(b) of the Finance Act … since 30 January 2009").

(d) Selling costs

"Any expenditure to the extent that it is directly incurred for the purposes of or in connection with the sale" of the asset — estate-agent commission, conveyancing fees on the seller's side, advertising, valuation fees for the sale. The word "directly" excludes general overheads. This deduction survives the foreign-currency regime (it is in the Section 39A(9a) list).

(e) Bad debts

"The amount of any debts due to the taxpayer to the extent to which they are proved … to be bad", provided the amount was included in a capital amount in the current or a previous year. This relieves a seller who brought the full accrued proceeds to tax (on accrual) but was never paid. If a bad debt later recovers, Section 8(1)(a) brings the recovery back into the gross capital amount.

(f) and (g) Taxed appeal costs

Paragraph (f) allows High Court or Special Court appeal costs, taxed by the Registrar and not recovered elsewhere, where the appeal is allowed in full or substantially (with a Supreme-Court-reversal proviso and a timing proviso). Paragraph (g) allows Supreme Court appeal costs on a wholly or substantially favourable decision where the Court so directs. These ensure a taxpayer who successfully challenges an assessment is not out of pocket for the litigation. Both survive the Section 39A(9a) foreign-currency list.

(h) The de minimis deduction

Where, after applying (a)–(g), "the total amount of the capital gains of a person in any year of assessment is [zw$25 000 or] US$ 50 or less, an amount equal to such total amount" is deducted — reducing the gain to nil. This is a small-gains relief that spares ZIMRA and the taxpayer the cost of collecting trivial amounts. (The ZWL figure has been repeatedly amended; the USD figure of US$50 was introduced by Act 5 of 2009.)

Step 3A — Deduct any assessed capital loss (Section 11(3))

After the Section 11(2) deductions, subtract any assessed capital loss from the previous year of assessment. An assessed capital loss (Section 2) arises when the Section 11 deductions exceed the capital amount — i.e. the funnel produces a negative number. The loss is carried forward and set against the next year's capital amount, subject to the three provisos (loss-trafficking, insolvency, PBC-conversion). Capital losses are ring-fenced: they offset capital gains only, never ordinary income.

Step 4 — Apply the rate and currency (Finance Act Sections 38, 39A)

Finally, select the rate by acquisition date and apply it in the currency of the gain:

1. Asset acquired before 22 February 2019 → 5% of the gross capital amount (Section 38(a)). The deductions you computed at Step 3 do not reduce this base; the 5% is a charge on the whole proceeds.
2. Asset acquired on or after 22 February 2019 → 20% of the capital gain (Section 38(b)). The Step 3 computation is the tax base.
3. Asset acquired 1 February 2009 – 22 February 2019, disposed afterwards → Section 39A(10) denies all Section 11 deductions, so the "capital gain" approaches the gross proceeds even though the 20% rate applies.
4. Foreign-currency gain → only Section 11(2)(a),(b),(d),(e),(f),(g) plus the 2½%/year allowance are deductible (Section 39A(9a)); the CPI allowance in (c) is unavailable.

Individual — post-2019 USD investment property (the standard modern case)

Facts. Tendai, a Harare resident, bought a second residential property (an investment flat, not his principal private residence) in March 2020 for USD 60,000. In 2022 he spent USD 15,000 on an extension. He sells it in the 2026 year of assessment for USD 120,000, paying USD 6,000 estate-agent commission. The flat was acquired after 22 February 2019, so the 20%-on-gain rate applies, and because the gain is in USD the Section 39A(9a) deduction list governs.

Computation (USD).

Note that the CPI formula in Section 11(2)(c) is not used — the gain is in foreign currency, so the 2½%/year allowance replaces it. Had this been a ZWL gain, line 7 would instead be the CPI uplift C × (A − B)/B.

SME / sole trader — pre-2019 commercial property (the "5%-on-gross" case)

Facts. Mhondoro Hardware (a sole trader's business) owns a commercial stand in Kwekwe bought in 2015 (i.e. before 22 February 2019) for USD 40,000, with USD 10,000 of improvements in 2017. It sells the stand in 2026 for USD 150,000, paying USD 7,500 commission. Because the asset was acquired before 22 February 2019, Section 38(a) charges 5% of the gross capital amount.

Computation (USD).

The instructive point: the cost (USD 40,000), the improvements (USD 10,000) and the commission (USD 7,500) do not reduce the tax, because the 5% rate is charged on the gross capital amount, not the gain. (Indeed, for assets acquired 1 February 2009 – 22 February 2019, Section 39A(10) would independently deny the deductions.) A practitioner who reflexively builds the full Section 11 funnel here and applies 5% to the net figure under-declares the tax — a classic and costly error.

Contrast: if the same stand had been acquired on or after 22 February 2019, the tax would be 20% of the gain (150,000 − 40,000 − 10,000 − 7,500 − the 2½%/yr allowance), illustrating how dramatically the acquisition-date threshold changes both the base and the rate.

Large corporate — unlisted shares in a property-holding company, with withholding reconciliation

Facts. Mashonaland Holdings (Pvt) Ltd sells its 100% shareholding in PropCo (Pvt) Ltd, whose only asset is an office block, for USD 2,000,000 in 2026. Mashonaland subscribed for the shares in 2021 for USD 800,000 and PropCo spent USD 300,000 improving the building in 2023 (which, by the Section 11(2)(b) look-through, is deemed expenditure on the shares). Selling/legal costs were USD 50,000. The shares were acquired after 22 February 2019 and are unlisted, so a 5% provisional withholding applies on the price (Finance Act Section 39(d)), credited against the final 20%-on-gain liability under Section 22J.

Final CGT computation (USD).

Withholding reconciliation.

Here the withholding (a provisional 5% on the price) under-collects relative to the final 20% on the gain, so a top-up of USD 45,500 is due. Had the gain been small relative to the price, the 5% on price could have over-collected, producing a refund under Section 22I (see Capital Gains Withholding Tax and Role of Intermediaries and Depositaries for the full collection mechanics).

Assessed-loss illustration

Suppose an individual sells an asset (acquired post-2019) for USD 50,000 that cost USD 80,000, with USD 5,000 selling costs. The funnel produces: capital amount 50,000; less (a) 80,000 and (d) 5,000 → a negative USD 35,000. This is an assessed capital loss (Section 2), carried forward under Section 11(3) to offset a future capital gain — it cannot be set against the individual's salary or business income (capital losses are ring-fenced to capital gains).

• Old Mutual Zimbabwe Ltd v Commissioner-General of ZIMRA 16-HH-143. Shares sold by employees through an indigenisation employee share trust to meet PAYE obligations were held to generate an amount liable for CGT. The case (annotated to Section 8(1)(a) in the source Act) confirms that the gross capital amount is determined by the statutory definition, and that a transaction's social or employment purpose does not take the proceeds outside the CGT base; "capital" is not a synonym for "tax-free".
• R (Pvt) Ltd v ZIMRA 19-HH-792. Annotated to Section 8(2)(b), this decision confirms that a disposal otherwise than by sale (a non-cash transfer) is a deemed sale at fair market price. For the computation, it means the gross capital amount on a gift or distribution in specie is the Commissioner's fair-market-price figure, not the (often nil or nominal) consideration the parties recorded — a determination that is itself objectionable under Section 25 (see How to Object and Appeal a CGT Assessment).
• Commissioner of Taxes v C W (Pvt) Ltd 89-ZLR-361 and Ellis N.O. v CoT 92-SC-001. Annotated to Section 10(c), these establish the exemption for proceeds of State/local-authority/statutory-corporation loan stock — a Step-2 exemption that removes such proceeds from the capital amount before any Section 11 deduction is considered.
• Sabeta M v Commissioner-General: ZIMRA 12-HH-079. Annotated to Section 7, this confirms that once the CGT has been paid, ZIMRA may not refuse to assess and issue a CGT clearance certificate. It bears on the computation indirectly: the figure produced by the funnel, once paid, must be recognised so that transfer can proceed (the transfer-gate provisions Sections 30A/32, taught in Administration of CGT by ZIMRA).

There is no Zimbabwean case squarely interpreting the Section 11(2)(c) inflation-allowance formula or the Section 39A(9a) 2½% allowance in the source materials; those provisions are applied as statute. Where a learner is tempted to cite a foreign indexation case, label it non-binding and prefer the statutory text.

1. Applying the 5% rate to the net gain instead of the gross amount. For a pre-22-February-2019 asset, Section 38(a) charges 5% of the gross capital amount. Subtracting cost first and then applying 5% systematically under-declares the tax. Always check the acquisition date before choosing the base.
2. Claiming Section 11 deductions on a foreign-currency gain that Section 39A bars. For USD gains, only Section 11(2)(a),(b),(d),(e),(f),(g) plus the 2½%/yr allowance are available — the CPI formula in (c) is unavailable, and for assets acquired 1 Feb 2009 – 22 Feb 2019, Section 39A(10) denies every deduction. Practitioners who index a USD gain by CPI, or who deduct anything for a 2009–2019 asset, overstate the deductions and under-pay.
3. Confusing improvements with repairs. Only capital additions, alterations and improvements are deductible under Section 11(2)(b); routine repairs and maintenance are revenue in nature and are not CGT deductions (they may have been income-tax-deductible instead).
4. Forgetting the property-company look-through. When shares in a land-owning company are sold, improvements to the land are deemed expenditure on the shares (Section 11(2)(b)). Omitting them overstates the gain on the share sale.
5. Treating dealer proceeds as a gross capital amount. If the seller is a dealer (share trader, property developer), the proceeds are income, excluded from the gross capital amount by the Section 8(1)(a) carve-out. Running such proceeds through the CGT funnel double-counts or mis-taxes them (see Capital vs Revenue Receipts).
6. Netting losses against ordinary income. An assessed capital loss (Section 11(3)) offsets future capital gains only; it is ring-fenced and cannot reduce salary or trading income.
7. Ignoring the de minimis floor. Where the year's total capital gains are US$50 or less, Section 11(2)(h) reduces them to nil. Assessing tax on a trivial gain ignores the relief.
8. Mis-timing the FX adjustment. Under the Section 8(2)(a) and Section 11(1) provisos, exchange-rate differences between accrual and receipt (or between incurring and paying) are adjusted in the year of accrual / year the liability was incurred, not the year of receipt/payment.

Work through the questions one at a time. Choose an answer and it is graded immediately, with an explanation and the provision it comes from. Your progress is saved, so you can stop and resume.

• The CGT computation is a three-stage funnel: gross capital amount (Section 8(1)(a)) → less Section 10 exemptions = capital amount (Section 8(1)(b)) → less Section 11 deductions = capital gain (Section 8(1)(c)); a negative result is an assessed capital loss (Section 2), carried forward under Section 11(3) against future capital gains only.
• The gross capital amount is the whole Zimbabwean-source proceeds (or Section 8(2) deemed proceeds), excluding amounts proved to be income-tax gross income (CGT and income tax are mutually exclusive) and including recovered/recouped former deductions.
• Section 11(2) deductions: (a) acquisition/construction cost (with inheritance, pre-1981 FMV and post-1981 dovetailing rules); (b) improvements (with the property-company look-through); (c) the CPI inflation allowance; (d) selling costs; (e) bad debts; (f)/(g) taxed appeal costs; (h) the US$50 de minimis floor. Section 12 bars deductions on exempt assets.
• The rate (Finance Act Section 38) turns on the acquisition date: before 22 February 2019 → 5% of the gross capital amount; on or after → 20% of the capital gain. For a pre-2019 asset the Section 11 deductions barely matter; for a post-2019 asset they are everything.
• For foreign-currency gains, Section 39A(9a) restricts deductions to Section 11(2)(a),(b),(d),(e),(f),(g) plus a flat 2½%-of-cost-per-year allowance in lieu of the CPI allowance; and Section 39A(10) denies all Section 11 deductions for assets acquired 1 February 2009 – 22 February 2019 — a punitive trap that taxes near-full proceeds at 20%.
• Provisional withholding (e.g. 5% on price for unlisted securities) is reconciled against the final liability via the Section 22J credit, producing a top-up or a Section 22I refund (see Capital Gains Withholding Tax).
• Policy insight: the asymmetry between "5% of gross" and "20% of gain" is a deliberate trade-off between administrative simplicity (a turnover charge needing no cost records) and equity (taxing only real net gain). The foreign-currency 2½%/year allowance is a pragmatic surrogate for true indexation in a hard-currency environment where a domestic CPI is a poor measure of real appreciation.

Table 1 — The computation funnel at a glance

Table 2 — How the date threshold and currency change the computation

Table 3 — Section 11(2) deductions and their survival in a foreign-currency gain

Diagram 1 — Decision flow for computing the capital gain and the tax

flowchart TD
 A[Disposal of an asset] --> B{Is it a specified asset?}
 B -->|No| Z[Outside CGT; consider income tax]
 B -->|Yes| C{Proceeds proved to be income-tax gross income?}
 C -->|Yes| Z
 C -->|No| D[Gross capital amount Section 8 1 a]
 D --> E[Less Section 10 exemptions]
 E --> F[Capital amount Section 8 1 b]
 F --> G{Acquisition date?}
 G -->|Before 22 Feb 2019| H[Tax = 5% of gross capital amount Section 38 a]
 G -->|1 Feb 2009 to 22 Feb 2019| I[No Section 11 deductions Section 39A 10]
 G -->|On or after 22 Feb 2019| J[Apply Section 11 deductions]
 I --> K[Capital gain near gross]
 J --> L{Gain in foreign currency?}
 L -->|Yes| M[Allow a b d e f g plus 2.5%/yr; no CPI]
 L -->|No| N[Allow all Section 11 2 incl CPI allowance c]
 M --> O[Capital gain Section 8 1 c]
 N --> O
 K --> P[Tax = 20% of gain Section 38 b]
 O --> P
 P --> Q[Less prior-year assessed capital loss Section 11 3]
 H --> R[CGT payable]
 Q --> R

Statutes & sections

• Capital Gains Tax Act [Chapter 23:01] — Section 6 (charge on capital gains accrued/received in a year of assessment, post-1 Aug 1981); Section 7 (calculation in accordance with the Finance Act); Section 8(1)(a)–(c) (defines gross capital amount, capital amount, capital gain — the funnel); Section 8(2)(a)–(h) (exchange-rate rule and deemed sales); Section 9 (deemed accrual, applying Taxes Act Section 10 mutatis mutandis); Section 10 (exemptions removed at Step 2); Section 11(1) (deduction from capital amount; FX-on-expenditure proviso); Section 11(2)(a)–(h) (the deductions: cost, improvements + property-company look-through, CPI inflation allowance, selling costs, bad debts, taxed appeal costs, de minimis); Section 11(3) (assessed capital loss carry-forward; loss-trafficking, insolvency, PBC-conversion provisos); Section 11(4) (no double deduction; election); Section 11(5) (lessor's deemed expenditure); Section 11(6) (deed-of-sale transferee's deemed cost); Section 12 (no deduction where the sale is exempt); Section 13 (damage/destruction deemed sale; cost-base reduction; two-year replacement rollover); Section 2 (definition of "assessed capital loss").
• Finance Act [Chapter 23:04] — Section 37A (foreign-currency definitions for Chapter VIII); Section 38(a) (5% of gross capital amount for assets acquired before 22 Feb 2019); Section 38(b) (20% of capital gain for assets acquired on/after 22 Feb 2019); Section 39 (CGT withholding rates — 1% final on listed securities, 5% on other securities, immovable-property provisional/final); Section 39A(9) (currency of the gain); Section 39A(9a) (restricted deduction list + 2½%/yr-of-cost allowance for foreign-currency gains); Section 39A(10) (no deductions for assets acquired 1 Feb 2009 – 22 Feb 2019); Section 39A(11) (presumption that purported-ZWL sales are in foreign currency).
• Income Tax Act [Chapter 23:06] — Section 8(1) (definition of "gross income", the boundary that the CGT gross capital amount excludes); Section 10 (deemed-accrual rules borrowed by CGT Section 9); Third Schedule para 2(a)/(c)/(f) (bodies for which the income-tax exclusion is reversed by the Section 8(1)(a) proviso).

Case law

• Old Mutual Zimbabwe Ltd v Commissioner-General of ZIMRA 16-HH-143 — proceeds of employee-share-trust shares sold to meet PAYE were liable to CGT; "capital" is not tax-free (annotated to Section 8(1)(a)).
• R (Pvt) Ltd v ZIMRA 19-HH-792 — a disposal otherwise than by sale is a deemed sale at fair market price (Section 8(2)(b)); fixes the gross capital amount on gifts/in-specie transfers.
• Commissioner of Taxes v C W (Pvt) Ltd 89-ZLR-361 and Ellis N.O. v CoT 92-SC-001 — Section 10(c) exemption for State/local-authority/statutory-corporation loan stock.
• Sabeta M v Commissioner-General: ZIMRA 12-HH-079 — once CGT is paid, ZIMRA must assess and issue the CGT certificate (annotated to Section 7).

ZIMRA guidance

• Comprehensive Guide to Form CGT 1 — ZIMRA External Guide — the per-disposal CGT remittance return on which the funnel computation is declared (note the guide's mis-citation of "Section 13" for the payment due date; the operative payment provision is Section 26 — see Administration of CGT by ZIMRA).
• Comprehensive Guide to the Special CGT Return — ZIMRA External Guide — the Section 30B special-CGT return for indirect/offshore transfers of mining title.