Every capital gains tax (CGT) computation in Zimbabwe is a three-stage funnel, and deductions are the final, decisive stage of that funnel. Under the Capital Gains Tax Act [Chapter 23:01], you begin with the gross capital amount (the proceeds, real or deemed, from selling a specified asset — Section 8(1)(a)), strip out exemptions to reach the capital amount (Section 8(1)(b)), and then subtract the allowable deductions to arrive at the capital gain (Section 8(1)(c)). The provision that lists those allowable deductions is Section 11 of the CGT Act, titled "Deductions allowed in determination of capital gain." This lesson is devoted to Section 11 in full, read clause by clause, together with its statutory companions: Section 12 (which switches deductions off for exempt assets), Section 13 (damage or destruction), and Section 20 (recovery of cost), and the all-important currency override in Section 39A of the Finance Act [Chapter 23:04].

The deductions allowed by Section 11(2) are a closed list: (a) the cost of acquiring or constructing the asset; (b) the cost of additions, alterations or improvements (with a crucial property-company look-through that treats improvements to a company's land as expenditure on its shares); (c) an inflation allowance computed by a Consumer Price Index (CPI) formula; (d) selling costs directly incurred on the disposal; (e) bad debts previously brought into the capital amount; (f) and (g) taxed legal costs of a successful appeal to the High/Special Court and Supreme Court respectively; and (h) a de minimis rule that wipes out a whole year's gain where it is US$50 or less. Section 11 then adds machinery: subsection (1) with its foreign-exchange timing proviso, subsection (3) which deducts a prior-year assessed capital loss (subject to anti-loss-trafficking, insolvency and PBC-conversion provisos), subsection (4) which forbids deducting the same amount twice and forces an election, subsection (5) which gives a lessor previously taxed under income tax a deemed cost, and subsection (6) which fixes the cost of a transferee of deed-of-sale rights.

Two ideas dominate the practical operation of Section 11, and both are functions of date and currency. First, the rate keyed to the acquisition date (Finance Act Section 38): a specified asset acquired before 22 February 2019 is taxed at 5% of the gross capital amount — meaning deductions are economically irrelevant to the tax because the charge falls on gross proceeds, not on the net gain; an asset acquired on or after 22 February 2019 is taxed at 20% of the capital gain, so deductions matter intensely. Second, the currency override in Finance Act Section 39A(9a): where the gain is in foreign currency (USD), the CPI inflation allowance in Section 11(2)(c) is disapplied and replaced by a flat 2½% per year of cost allowance, and only paragraphs (a), (b), (d), (e), (f) and (g) of Section 11(2) survive. A punitive trap sits between the dates: Section 39A(10) denies all Section 11 deductions for an asset acquired between 1 February 2009 and 22 February 2019 but disposed of after 22 February 2019 — effectively taxing the full proceeds at 20%.

For the practitioner, Section 11 is where good record-keeping converts into real tax savings — but only for post-22 February 2019 assets in the right currency. For the examiner, the section is a favourite because it interlocks with exemptions (Section 10), deemed sales (Section 8(2)), and the rate split, and because the currency rules are easy to misapply. This lesson builds directly on introductiontocapitalgains, cgtspecifiedassets, cgtexemptions, cgtdisposalofassets and calculationofcapitalgains (which set out the whole funnel), and feeds cgtnonpermissibledeductions (the mirror image — what may not be deducted) and ratesofcapitalgains.

Capital gains tax is, at its core, a tax on enrichment from the disposal of capital assets. A person who buys a building for US$100,000 and sells it for US$160,000 is, in a loose sense, US$60,000 "richer." But the law does not tax that crude difference. It taxes a carefully constructed figure called the capital gain, and the journey from sale price to capital gain runs through the deductions allowed by Section 11 of the Capital Gains Tax Act [Chapter 23:01].

Why does this matter so much? Because the deduction stage is where fairness enters the system. Without deductions, CGT would tax the return of your capital alongside the return on your capital — it would tax you on money that was never a gain at all, merely the recovery of what you originally paid. The cost of the asset is not a gain; it is the taxpayer's own money coming back. The cost of improving the asset is not a gain; it is reinvested capital. The cost of selling the asset (agent's commission, conveyancing, advertising) is not a gain; it is an expense of realising the gain. And in an economy that has experienced extreme inflation and currency change, even the nominal increase in price may be partly or wholly an inflationary illusion rather than real enrichment — which is why the law grants an inflation allowance. Section 11 exists to subtract all of these so that tax falls only on the genuine, real capital gain.

To orient the beginner, recall the three defined amounts from introductiontocapitalgains and calculationofcapitalgains, each defined in Section 8(1) of the CGT Act:

• "Gross capital amount" (Section 8(1)(a)) — the total received or accrued, or deemed received or accrued, from a source within Zimbabwe, from the sale on or after 1 August 1981 of specified assets, excluding any amount proved by the taxpayer to be "gross income" under the Income Tax Act (so CGT and income tax are mutually exclusive), and including any previously allowed Section 11(2) deduction that has been recovered or recouped.
• "Capital amount" (Section 8(1)(b)) — the gross capital amount less amounts exempt from CGT under the Act (the exemptions are in Section 10; see cgtexemptions).
• "Capital gain" (Section 8(1)(c)) — the capital amount less all the amounts allowed to be deducted under the Act. Those amounts are the subject of this lesson.

So the funnel is: gross capital amount − exemptions = capital amount; capital amount − Section 11 deductions = capital gain. The tax is then a rate (Finance Act Section 38) applied to that capital gain (for post-22 February 2019 assets) or — and this is the twist that re-frames everything — to the gross capital amount (for pre-22 February 2019 assets, where the rate is 5% of gross and deductions therefore do nothing).

Deductions are heavily examinable and a frequent ZIMRA audit flag, because they are where taxpayers either (i) inflate the cost base with unsupported figures, (ii) claim income-tax-deductible expenditure twice (once against income, again against the capital gain), (iii) mis-compute the inflation allowance, or (iv) apply the wrong currency rules. Mastery of Section 11 is therefore both a money-saving and a risk-management skill.

The governing provision is Section 11 of the Capital Gains Tax Act [Chapter 23:01], "Deductions allowed in determination of capital gain," supported by Section 12 (no deductions for exempt assets), Section 13 (damage/destruction), Section 20 (recovery of cost), and overridden in currency matters by Section 39A of the Finance Act [Chapter 23:04], with the rate set by Finance Act Section 38. We take each in turn, by section number.

Section 11(1) — the deduction rule and the foreign-exchange proviso

Section 11(1) states the operative rule: "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." Two points of language matter. First, deductions are subtracted from the capital amount (i.e. after exemptions), not from the gross capital amount — order matters. Second, only the amounts allowed "in terms of this section" are deductible; Section 11 is a closed list, not an open invitation to deduct anything that feels like an expense. If an outlay is not within one of paragraphs (a)–(h) of subsection (2) (or another express provision of the Act), it is not deductible — a theme developed fully in the companion lesson cgtnonpermissibledeductions.

Section 11(1) carries a foreign-exchange proviso. Where, because of a movement in the exchange rate between Zimbabwe and another country, the amount actually paid in Zimbabwean currency differs from the liability incurred before the rate moved: (a) the deduction is the amount actually paid in Zimbabwean currency; and (b) if the liability and the payment fall in different years of assessment, the increase or reduction is given effect in the year the liability was incurred. In plain terms: the deduction follows the real cash actually parted with, not the historic book liability — a sensible anti-distortion rule in a multi-currency economy. (This mirrors the symmetrical rule for the gross capital amount in Section 8(2)(a), discussed in cgtdisposalofassets.)

Section 11(2) — the closed list of allowable deductions

Section 11(2) provides: "The deductions which shall be allowed for the purposes of subsection (1) shall be—" followed by paragraphs (a) to (h). An editor's note embedded in the source Act directs the reader to "the inflationary allowance deductible in terms of Section 39A Para 9(b) of the Finance Act [Chapter 23:04]" — an early signal that the inflation allowance has a currency-specific override, addressed in section C and section D below. Each paragraph is parsed in detail in section C; in outline they are:

• (a) Cost of acquisition or construction of the assets sold in the year (with special base rules for inherited and non-purchased assets).
• (b) Cost of additions, alterations or improvements (with the property-company look-through).
• (c) The inflation allowance — a CPI-indexation amount computed by formula.
• (d) Expenditure directly incurred on the sale (selling costs).
• (e) Bad debts previously included in the capital amount.
• (f) Taxed High Court / Special Court appeal costs of a successful appeal.
• (g) Taxed Supreme Court appeal costs of a successful appeal.
• (h) The de minimis allowance — the whole gain where total gains for the year are US$50 (or the redenominated ZWL equivalent) or less.

Section 11(3) — deduction of a prior-year assessed capital loss

Section 11(3) provides that from the capital amount remaining after the subsection (2) deductions, there shall be deducted any assessed capital loss of the previous year of assessment. An "assessed capital loss" (defined in Section 2) is, in essence, the amount by which the deductions exceed the capital amount — a negative capital gain that is ring-fenced and carried forward to be set only against future capital gains (it cannot be set against ordinary income). Three provisos police abuse:

• Proviso (i) — anti-loss-trafficking. If during a year there is a change in the shareholding of a company that has an assessed capital loss (or of a company that controls it), and the Commissioner is satisfied the change was effected solely or mainly to take advantage of that loss, the pre-change loss is not deductible. "Control" here means holding the majority of voting rights. This stops the purchase of loss-laden shell companies to shelter unrelated gains.
• Proviso (ii) — insolvency. A taxpayer who has been adjudged or declared insolvent, or who has assigned his estate for the benefit of creditors, may not carry forward an assessed capital loss incurred before that event.
• Proviso (iii) — corporate conversions. Where a company with an assessed capital loss is converted into a private business corporation (PBC) under the Companies and Other Business Entities Act [Chapter 24:31], or vice versa, the new entity is allowed the assessed capital loss as a deduction after the conversion — i.e. the loss survives a mere change of legal form.

Section 11(4) — no double deduction; the election rule

Section 11(4) prevents an amount that could be deducted under more than one provision of the Act from being deducted more than once, whether in the same or different years. Where two provisions would allow the same amount in the same year, the taxpayer must elect which one to use. This is the CGT analogue of the income-tax anti-duplication principle.

Section 11(5) — the lessor's deemed cost

Section 11(5) addresses the owner of immovable property who, as lessor, was previously charged to income tax under paragraph (e) of the "gross income" definition in Section 8(1) of the Income Tax Act (lease premiums / improvements effected by a lessee that are brought into the lessor's income). Such a person is deemed to have incurred expenditure under Section 11(2)(a) or (b) equal to the amount already taxed as income, measured at the time of that inclusion. This prevents double taxation: an amount already taxed as income is given back as a CGT cost so it is not taxed again as part of the capital gain.

Section 11(6) — transferee of deed-of-sale rights

Section 11(6) provides that where a person transfers to another his rights under a deed of sale in respect of the passing of ownership of a specified asset, the transferee is deemed, for Section 11 purposes, to have acquired the asset from the original seller for the amount payable under the deed of sale. This dovetails with the deemed-sale rule in Section 8(2)(f) (which taxes the transferor of those rights — see cgtdisposalofassets): Section 8(2)(f) fixes the seller's proceeds, Section 11(6) fixes the buyer's cost base.

Section 12 — no deductions for exempt assets

Section 12, "Circumstances in which no deductions may be made," states tersely: "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." The logic is symmetry: if the gain is exempt, the costs are not deductible — you cannot use the costs of an exempt asset to shelter the gain on a taxable one. This is examined fully in cgtnonpermissibledeductions, but it belongs here because it is the immediate statutory limit on Section 11.

Section 13 — damage or destruction

Section 13 treats damage or destruction of a specified asset as a deemed sale for an amount equal to any receipt or accrual (e.g. insurance proceeds) — Section 13(1). But it provides relief: Section 13(2) says that if the receipt does not exceed the Section 11(2)(a) + (b) costs, the asset is not deemed sold; instead those costs are reduced and the inflation allowance recalculated on the reduced base. Section 13(3) grants a two-year replacement rollover: where the Commissioner is satisfied the receipt has been or will be spent within two years on a replacement asset of a like nature or on repairing the damaged asset, the deemed-sale charge does not apply to the amount so spent (only any unspent portion is taxed). Section 13(4) then locks the replacement/repair expenditure out of any future Section 11 deduction — you cannot get relief for the same money twice.

Section 20 — recovery of cost of an unsold asset

Section 20 mirrors Section 13 for recoveries or recoupments relating to the cost of an asset that has not been sold. If the amount recovered exceeds the Section 11(2)(a)+(b) cost base, the asset is deemed sold for that amount; if it does not exceed the cost base, the cost base is reduced (and the inflation allowance recalculated on the reduced base), the asset being deemed sold on the date of the final receipt. This dovetails with the recoupment add-back in the Section 8(1)(a) definition of gross capital amount, which brings recovered/recouped Section 11(2) deductions back into charge.

Finance Act Section 38 — the rate that decides whether deductions matter

Finance Act [Chapter 23:04] Section 38 fixes the CGT rate. As confirmed in ratesofcapitalgains and re-confirmed here against the source Finance Act:

• A specified asset acquired before 22 February 2019: 5% of the gross capital amount (Section 38(a)). The charge is on gross proceeds, so the Section 11 deductions do not reduce the tax at all.
• A specified asset acquired on or after 22 February 2019: 20% of the capital gain (Section 38(b)). Here the Section 11 deductions reduce the tax dollar-for-dollar.

The date threshold is 22 February 2019 (substituted by Finance Act 7/2021, backdated), keyed to the acquisition date — not 1 February 2009, an error corrected in prior lessons.

Finance Act Section 39A — the currency override on Section 11 deductions

This is the provision that re-shapes Section 11 in practice:

• Section 39A(9) splits the tax by the currency of the gain: a Zimbabwean-currency gain is taxed under Section 38(a); a foreign-currency (USD) gain under Section 38(b).
• Section 39A(9a) — the key override. For a gain received or accrued in foreign currency, no Section 11 deductions are allowed except: paragraphs (a), (b), (d), (e), (f) and (g) of Section 11(2); and, in lieu of the CPI inflation allowance in (c), an allowance of 2½% per year of the purchase price (and 2½% per year of the cost of any additions/improvements) from acquisition (or improvement) to sale. A proviso lets the Minister prescribe a formula to convert ZWL-incurred expenditure into USD. So for USD gains, the CPI formula in Section 11(2)(c) is switched off and replaced by a flat 2½%/year allowance.
• Section 39A(10) — the trap. For a specified asset acquired on or after 1 February 2009 but before 22 February 2019 and disposed of after that date, no Section 11 deductions at all are allowed. The 20% then bites on essentially the full proceeds.
• Section 39A(11) presumes a purported ZWL sale to be a USD sale at market value unless the seller proves otherwise — closing a currency-arbitrage escape.

We now build each deduction from the ground up.

(a) Cost of acquisition or construction — Section 11(2)(a)

This is the primary deduction: "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." Three features:

1. "To the extent incurred on acquisition or construction." It covers the purchase price of a bought asset and the build cost of a constructed one. It is the return of capital — the taxpayer's own money — and so is not part of any gain.
2. The income-tax carve-out. The paragraph excludes "expenditure in respect of which a deduction is allowable in the determination of the seller's taxable income" under Section 8(1) of the Income Tax Act. This is the anti-double-dip rule: if you already got the benefit of the expenditure against income tax (e.g. trading stock cost, or capital allowances under the Fourth Schedule), you cannot deduct it again against the capital gain. It enforces the mutual exclusivity of income tax and CGT established in itccapitalvsrevenue and introductiontocapitalgains.
3. Deemed-cost rules for non-purchased assets. Where the asset was acquired otherwise than by ordinary purchase, the paragraph supplies a base: - By inheritance (subparagraph (i)): the taxpayer is deemed to have incurred cost equal to the value placed on the asset in the deceased estate. (So an heir's base is the estate value — important when the heir later sells, because the executor's own realisation is exempt under Section 10(b), but the heir's later sale is taxable on the gain above estate value; see cgtexemptions.) - Otherwise than by purchase or inheritance (subparagraph (ii)): e.g. by donation or distribution — - A. Acquired before 1 August 1981: deemed cost is the fair market value at acquisition (proved to the Commissioner). 1 August 1981 is the commencement of the CGT Act; pre-commencement appreciation is not taxed, so the base is reset to 1981 value. (Note: a person who acquired pre-1 August 1981 cost figure is one of the objectionable Commissioner determinations under Section 25(1) — see cgtobjectionsandappeals.) - B. Acquired on or after 1 August 1981: deemed cost is the amount, if any, that was included — either in the gross capital amount (for CGT) or in the gross income (for income tax) — of the person who disposed of the asset to the taxpayer. In other words, the recipient's base is the value on which the transferor was taxed. This produces continuity of the tax base across a non-sale transfer (e.g. a donation taxed on the donor at fair market price under Section 8(2)(b) becomes the donee's cost).

(b) Additions, alterations or improvements — Section 11(2)(b) and the property-company look-through

Section 11(2)(b) allows "expenditure ... incurred on additions, alterations or improvements to specified assets," again excluding anything already deductible against income tax. Improvements add to the cost base because they are reinvested capital, not gain. The classic distinction (borrowed from income-tax jurisprudence) is improvement vs repair: an improvement (a new wing, a swimming pool, a boundary wall) is capital and goes into the CGT base under (b); a repair (repainting, fixing a leak) is revenue and, if the asset was income-producing, would have been deductible against income — and therefore is excluded here.

The property-company look-through is the examiner's favourite. The paragraph provides: "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 defeats a common avoidance idea: instead of selling land directly, put the land in a company and sell the shares. The shares are still a specified asset (a marketable security — see cgtspecifiedassets), so the disposal is taxable; and the look-through lets the shareholder add improvements to the company's land to the cost of the shares, keeping the computation honest. There is no escape by "wrapping" land in a company.

(c) The inflation allowance — Section 11(2)(c)

Section 11(2)(c) grants, "in respect of the year of assessment, an amount determined in accordance with the following formula" — a CPI indexation allowance (substituted by Finance Act 7/2021 w.e.f. 31 December 2021). The Act defines the variables:

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

The purpose of the inflation allowance is to tax only the real gain. In a high-inflation environment, a nominal rise in price may reflect currency debasement rather than genuine enrichment; indexing the cost base to CPI removes that inflationary component from charge. Crucially, this CPI allowance applies to Zimbabwean-currency (ZWL) gains. For foreign-currency (USD) gains it is switched off by Finance Act Section 39A(9a) and replaced by a flat 2½%-per-year allowance (section D).

(d) Selling costs — Section 11(2)(d)

Section 11(2)(d) allows "any expenditure to the extent that it is directly incurred for the purposes of or in connection with the sale of a specified asset." These are the costs of realising the gain — estate-agent commission, conveyancing and transfer fees borne by the seller, advertising, valuation fees, brokerage on a share sale. The word "directly" is the control: only expenditure with a direct nexus to the sale qualifies; general overheads or remote costs do not.

(e) Bad debts — Section 11(2)(e)

Section 11(2)(e) allows the amount of debts due to the taxpayer that are proved to the Commissioner to be bad, but only if that amount was included (in the current or a previous year) in the taxpayer's capital amount under the Act. The logic is symmetry: a credit-sale gain is taxed on accrual (entitlement, not receipt — Section 9 read with Income Tax Act Section 10), so if the buyer later defaults and the debt goes bad, the seller would otherwise be taxed on money never received. Paragraph (e) reverses that. If the bad debt is later recovered, the recovery is added back to the gross capital amount under Section 8(1)(a) (which expressly includes recouped Section 11(2) deductions).

(f) and (g) Taxed appeal costs — Section 11(2)(f) and (g)

These two paragraphs allow the legal costs of a successful tax appeal, taxed by the Registrar of the relevant court and not recovered from any source:

• (f) High Court / Special Court costs, where the appeal (under Part VI of the CGT Act) is allowed in full, or allowed to a substantial degree with a direction that costs be allowed. A proviso withholds the deduction until the time for a Supreme Court appeal has lapsed (or any such appeal is determined), and if the matter goes to the Supreme Court, the deduction stands only if the Supreme Court decision is wholly or substantially favourable to the taxpayer with a direction allowing the costs.
• (g) Supreme Court costs, where the Supreme Court decision is wholly or substantially favourable to the taxpayer and it directs that the costs be allowed.

These recognise that a taxpayer forced to litigate a CGT assessment and winning should not bear the irrecoverable cost of vindication out of taxed money. They tie directly to the objections-and-appeals machinery in cgtobjectionsandappeals.

(h) The de minimis allowance — Section 11(2)(h)

Section 11(2)(h) provides that after applying paragraphs (a)–(g), if the total capital gains of a person in the year are US$50 or less (the Act also shows a historic ZW$25,000 figure, the result of repeated redenomination), an amount equal to that total is allowed — i.e. the whole small gain is wiped out. This is an administrative convenience threshold: it is not worth ZIMRA's or the taxpayer's time to assess and collect tax on trivial gains. Note: the de minimis is disapplied for suspensive sales (Section 18(3)) and credit sales (Section 19(2)) — see cgtsuspensivesales and cgtdisposalofassets.

The deductions in Section 11 behave completely differently depending on the acquisition date and the currency of the gain. The worked examples below make that concrete. All figures are illustrative; the rate and currency rules are grounded in Finance Act Sections 38 and 39A.

Scenario 1 — Individual, post-22 February 2019 USD residential investment property (the "normal" case where deductions matter)

Facts. Tendai, an individual, buys a residential investment flat in Harare in March 2020 for USD 80,000. In 2022 she spends USD 20,000 building an additional bedroom and securing the boundary. She sells the flat in 2026 for USD 160,000, paying USD 8,000 estate-agent commission and USD 2,000 conveyancing. The gain is in USD, and the asset was acquired after 22 February 2019, so Section 38(b) (20% of the gain) applies and the Section 39A(9a) currency rules govern the deductions.

Under Section 39A(9a), the allowable deductions are Section 11(2)(a), (b), (d) — and in lieu of the CPI allowance (c), a 2½%-per-year allowance on cost and improvements.

The deductions reduced a nominal USD 80,000 rise (160,000 − 80,000) to a taxable gain of USD 36,000, and the 2½%/year allowance gave back USD 14,000 of inflationary uplift. Tax: USD 7,200. Good records (purchase agreement, improvement invoices, agent's and conveyancer's accounts) are what make these deductions stand up to audit.

Scenario 2 — The pre-22 February 2019 asset, where deductions are economically irrelevant

Facts. Same flat, but assume it was acquired in 2015 (before 22 February 2019) and sold in 2026 for USD 160,000. The rate is now Section 38(a): 5% of the gross capital amount.

Notice: the Section 11 deductions never enter the computation. Because the charge is 5% of the gross proceeds, not of the net gain, the cost, improvements and selling costs are irrelevant to the tax. A taxpayer who diligently assembles deduction records for a pre-2019 asset is wasting effort: the tax is fixed at 5% of price regardless. This is one of the most-missed points in CGT, and a favourite trap question. (And note the brutal interaction with Section 39A(10): had the asset been acquired between 1 February 2009 and 22 February 2019, deductions would be denied and the 20% rate applied to near-full proceeds — see Scenario 5.)

Scenario 3 — SME / property company: the Section 11(2)(b) look-through

Facts. Kuda owns 100% of the shares in Mvuma Properties (Pvt) Ltd, whose only asset is a commercial building in Mutare. He acquired the shares in 2021 for USD 120,000. The company then spent USD 60,000 on a new loading bay and roof reconstruction (improvements to the building). Kuda sells the shares in 2026 for USD 300,000, paying USD 9,000 brokerage. Shares are a specified asset (marketable security), the gain is USD, and acquisition was post-22 February 2019.

Under the property-company look-through in Section 11(2)(b), the USD 60,000 of improvements to the company's land are deemed to be expenditure on the shares and are deductible against the share proceeds.

Without the look-through, Kuda might have argued the USD 60,000 was the company's expenditure, not his — and lost the deduction. The look-through ensures the improvements still reduce his share gain, so there is no avoidance advantage and no unfairness either way.

Scenario 4 — Bad debt and its later recovery (Section 11(2)(e) + Section 8(1)(a) add-back)

Facts. Rumbi sells a specified asset on credit in 2026, the gain accruing on entitlement. Part of the price, USD 15,000, was included in her capital amount but the buyer defaults and the debt is proved bad. In 2027 the buyer unexpectedly pays USD 15,000.

• 2026: Rumbi deducts the USD 15,000 bad debt under Section 11(2)(e), reducing her capital gain (and tax) for that year.
• 2027: The USD 15,000 recovered is brought back into the gross capital amount under Section 8(1)(a) (which expressly "includes any amount allowed to be deducted in terms of subsection (2) of section eleven which has been recovered or recouped") and taxed.

The symmetry is exact: relief when the money is lost, charge when it comes back. The same recoupment logic underlies Section 20 (recovery of cost of an unsold asset).

Scenario 5 — The Section 39A(10) "dead zone" (1 Feb 2009 – 22 Feb 2019): no deductions at all

Facts. Farai bought commercial land in 2014 for USD 50,000, improved it for USD 30,000, and sells in 2026 for USD 200,000 with USD 12,000 selling costs. The asset was acquired on or after 1 February 2009 but before 22 February 2019 and disposed of after that date — squarely within Section 39A(10).

Farai pays USD 40,000 — tax on the entire proceeds, because Section 39A(10) denies every Section 11 deduction for assets acquired in this window. Compare: had the same asset been acquired before 1 February 2009, he would have paid 5% of 200,000 = USD 10,000 (Scenario 2 logic); had it been acquired after 22 February 2019, he would have deducted his USD 80,000+ of costs and paid 20% on a far smaller gain (Scenario 1 logic). The acquisition date is worth tens of thousands of dollars. This is the single most punitive interaction in the CGT deduction rules and must be checked on every disposal.

Large corporates / multinationals

For a large corporate, the Section 11 mechanics are the same, but three features dominate: (i) the income-tax carve-out in (a) and (b) matters intensely, because a corporate that has claimed capital allowances (Fourth Schedule of the Income Tax Act) on a building cannot also deduct that same construction cost against the capital gain — the carve-out prevents the double-dip, and the recoupment of capital allowances is dealt with on the income-tax side (see itccapitalallowances / itcprohibited); (ii) the assessed capital loss rules in Section 11(3), especially the anti-loss-trafficking proviso, are a live issue in M&A, where buying a loss company to shelter gains is precisely what proviso (i) defeats (see cgtcorporaterestructuring); and (iii) group restructurings often use the rollover reliefs in Sections 15–17 instead of (or alongside) Section 11 deductions — those rollovers carry over the transferor's Section 11(2) base rather than allowing a fresh deduction (see cgtexemptions and cgtcorporaterestructuring).

Zimbabwean CGT deduction jurisprudence is thinner than its income-tax counterpart, but several authorities (annotated in the source Acts) bear directly on Section 11 and its companions:

• Commissioner of Taxes v C W (Pvt) Ltd 89-ZLR-361 and Ellis N.O. v COT 92-SC-001. These cases concern the Section 10(c) exemption for loan stock issued to the State, local authorities and statutory corporations. They matter to deductions because of Section 12: where the gain on such an asset is exempt, the expenditure on it is not deductible. The cases anchor the symmetry principle — exempt gain, no deduction — that Section 12 codifies.
• R (Pvt) Ltd v ZIMRA 19-HH-792. The court upheld the deemed-sale-at-fair-market-price rule in Section 8(2)(b) for a non-sale disposal. Its deduction relevance is via Section 11(2)(a)(ii)(B): where the transferor is taxed on the fair market price, that price becomes the transferee's deemed cost — the case illustrates how the deemed proceeds on one party set the cost base for the next.
• Old Mutual Zimbabwe Ltd v Commissioner-General, ZIMRA 16-HH-143. The court held that proceeds of shares (sold by employees through an indigenisation share trust to meet PAYE) were within the gross capital amount and that "capital ≠ tax-free." For deductions, the case underscores that the starting figure (gross capital amount) is determined first, and only then are Section 11 deductions applied; characterising a receipt as "capital" does not remove it from the CGT computation.
• Sabeta M v Commissioner-General, ZIMRA 12-HH-079. ZIMRA may not refuse to issue a CGT clearance certificate once the tax (computed after deductions) has been paid. The deduction relevance is procedural: the correct net figure must be assessed before the transfer gate (Section 30A) is satisfied.
• Sommer Ranching (Pvt) Ltd v COT 99-SC-065. Confirms that the Income Tax Act machinery applies mutatis mutandis to CGT (via Sections 9, 23, 24, 27), which is how concepts like accrual, assessment and recovery are imported into the deduction-and-computation process.
• Sibanda G v Masanga L 24-SC-090. Illustrates the friction where fair market price (relevant to the cost base via Section 14 and to deemed proceeds) has shifted dramatically over time, complicating clearance and transfer.

Where no on-point Zimbabwean authority exists for a particular deduction question, the matter is governed by the statutory text of Section 11 read strictly (the contra fiscum and strict-construction canons discussed in itcsources), not by analogy to income-tax deduction cases, because the CGT deduction list is a distinct closed code.

1. Claiming deductions on a pre-22 February 2019 asset. Because the rate is 5% of gross (Section 38(a)), Section 11 deductions do not reduce the tax. Assembling cost records for such assets is futile (Scenario 2).
2. Forgetting the Section 39A(10) "dead zone." Assets acquired 1 February 2009 – 22 February 2019 and sold after get no deductions and the 20% rate on near-full proceeds (Scenario 5). Always check the acquisition date first.
3. Applying the CPI inflation allowance to a USD gain. For foreign-currency gains, Section 11(2)(c) is switched off by Section 39A(9a) and replaced by the flat 2½%/year allowance. Mixing the two over-claims relief and invites assessment.
4. Double-dipping the income-tax deduction. Deducting under Section 11(2)(a)/(b) an amount already allowed against income tax (trading-stock cost, capital allowances) breaches the express carve-out and the Section 11(4) anti-duplication rule.
5. Deducting the costs of an exempt asset. Section 12 prohibits it. The costs of a section-10-exempt disposal cannot shelter a taxable gain elsewhere.
6. Treating repairs as improvements (or vice versa). Only capital improvements go into the Section 11(2)(b) base; revenue repairs do not (and may already be income-tax deductions).
7. Over-broad "selling costs." Section 11(2)(d) requires expenditure directly incurred on the sale. General overheads, financing costs, or remote expenses do not qualify.
8. Mishandling the property-company look-through. Sellers of shares in land-owning companies sometimes overlook that improvements to the company's land are deemed expenditure on the shares (Section 11(2)(b)) — a deduction that is easy to miss and easy for ZIMRA to test.
9. Carrying forward a tainted assessed capital loss. A loss bought through a change of shareholding (proviso (i)) or surviving insolvency (proviso (ii)) is not deductible.
10. Claiming the same amount twice across provisions. Section 11(4) forces an election where two provisions overlap; claiming under both is disallowed and penalised.

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.

• Section 11 of the CGT Act [Chapter 23:01] is the closed list of allowable CGT deductions; only amounts within it (or another express provision) reduce the capital gain (Section 8(1)(c)).
• The deductions are: (a) acquisition/construction cost (with inheritance and pre-/post-1 August 1981 deemed-cost rules); (b) improvements (with the property-company look-through); (c) the CPI inflation allowance; (d) direct selling costs; (e) bad debts previously taxed; (f)/(g) taxed costs of a successful appeal; (h) the US$50 de minimis wipe-out.
• The machinery: (1) FX timing proviso; (3) prior-year assessed capital loss with anti-trafficking/insolvency/PBC-conversion provisos; (4) no double deduction + election; (5) lessor's deemed cost; (6) transferee's deed-of-sale cost.
• Section 12 denies deductions for exempt assets; Section 13 (damage/destruction) and Section 20 (recovery of cost) adjust the base and can trigger deemed sales; recovered deductions return to charge under Section 8(1)(a).
• Date is destiny (Finance Act Section 38): pre-22 February 2019 assets are taxed at 5% of gross (deductions irrelevant); on/after 22 February 2019 at 20% of the gain (deductions decisive).
• Currency rewrites the deductions (Finance Act Section 39A): for USD gains, Section 11(2)(c) CPI is replaced by a 2½%/year allowance and only (a),(b),(d),(e),(f),(g) survive (Section 39A(9a)); for assets acquired 1 Feb 2009 – 22 Feb 2019 and sold later, no deductions at all (Section 39A(10)).
• The anti-double-dip carve-out in (a)/(b) keeps income tax and CGT mutually exclusive — never deduct against the capital gain what was already deducted against income.
• Policy insight: deductions exist so that CGT taxes real enrichment, not the return of capital or inflationary illusion — but the Zimbabwean rate-and-currency overlay means the practical value of a deduction depends entirely on when the asset was acquired and in what currency the gain arises.

Table 1 — The Section 11(2) allowable deductions at a glance

Table 2 — How acquisition date and currency change everything

Diagram 1 — Determining the allowable deductions on a disposal

flowchart TD
 A[Disposal of a specified asset] --> B{Is the gain exempt under Section 10?}
 B -->|Yes| C[No deductions Section 12; gain out of charge]
 B -->|No| D{Acquisition date?}
 D -->|Before 22 Feb 2019| E[Rate = 5% of GROSS FA Section 38a; Section 11 deductions do not reduce tax]
 D -->|1 Feb 2009 to 22 Feb 2019| F[Rate = 20% of gain; NO Section 11 deductions Section 39A 10]
 D -->|On or after 22 Feb 2019| G{Currency of the gain?}
 G -->|ZWL| H[Deduct Section 11 2 a to h incl CPI allowance c]
 G -->|USD foreign| I[Deduct Section 11 2 a b d e f g plus 2.5 percent per yr in lieu of CPI Section 39A 9a]
 H --> J[Capital gain x 20 percent FA Section 38b]
 I --> J

Statutes & sections

• Capital Gains Tax Act [Chapter 23:01] — Section 8(1)(a)–(c) (gross capital amount / capital amount / capital gain; Section 8(1)(a) includes recovered/recouped Section 11(2) deductions); Section 8(2)(a) (foreign-exchange timing of the gross capital amount); Section 9 (deemed accrual, ITA Section 10 mutatis mutandis); Section 10 (exemptions — interacts with Section 12); Section 11 (deductions: Section 11(1) rule + FX proviso; Section 11(2)(a)–(h) the deductions; Section 11(3) assessed capital loss + provisos (i) anti-trafficking, (ii) insolvency, (iii) PBC conversion; Section 11(4) no double deduction/election; Section 11(5) lessor deemed cost; Section 11(6) deed-of-sale transferee cost); Section 12 (no deductions for exempt-asset expenditure); Section 13 (damage/destruction; deemed sale, cost-base reduction, 2-year replacement rollover); Section 14 (fair market price); Section 20 (recovery of cost of unsold asset); Section 25 (objections — pre-1981 cost and other deduction-related Commissioner decisions objectionable).
• Finance Act [Chapter 23:04] — Section 38 (rate: 5% of gross for assets acquired before 22 Feb 2019 / 20% of gain for assets acquired on or after 22 Feb 2019; substituted by FA 7/2021 backdated to 22 Feb 2019); Section 39A(9) (currency split of the gain); Section 39A(9a) (USD gains: only Section 11(2)(a),(b),(d),(e),(f),(g) + 2½%/yr allowance in lieu of the Section 11(2)(c) CPI allowance; inserted by FA 7/2021); Section 39A(10) (no Section 11 deductions for assets acquired 1 Feb 2009 – 22 Feb 2019 and disposed of after; inserted by FA(No.2) 7/2019); Section 39A(11) (purported ZWL sale presumed USD).
• Income Tax Act [Chapter 23:06] — Section 8(1) ("gross income" / "taxable income" definitions, anchoring the anti-double-dip carve-out in CGT Section 11(2)(a)/(b) and the lessor inclusion in CGT Section 11(5) via the para (e) "gross income" inclusion); machinery imported into CGT via CGT Sections 9, 23, 24, 27.
• Companies and Other Business Entities Act [Chapter 24:31] — referenced in CGT Section 11(3) proviso (iii) (company ↔ PBC conversion preserving the assessed capital loss).

Case law

• Commissioner of Taxes v C W (Pvt) Ltd 89-ZLR-361 and Ellis N.O. v COT 92-SC-001 — Section 10(c) loan-stock exemption; anchor the Section 12 symmetry (exempt gain → no deduction).
• R (Pvt) Ltd v ZIMRA 19-HH-792 — Section 8(2)(b) deemed sale at fair market price; the taxed price becomes the transferee's deemed cost (Section 11(2)(a)(ii)(B)).
• Old Mutual Zimbabwe Ltd v Commissioner-General, ZIMRA 16-HH-143 — proceeds within the gross capital amount; "capital ≠ tax-free"; deductions applied only after the starting figure is fixed.
• Sabeta M v Commissioner-General, ZIMRA 12-HH-079 — clearance certificate must issue once the (net) tax is paid.
• Sommer Ranching (Pvt) Ltd v COT 99-SC-065 — Income Tax Act machinery applies mutatis mutandis to CGT.
• Sibanda G v Masanga L 24-SC-090 — fair-market-price shifts and the transfer/clearance gate.

ZIMRA guidance

• Comprehensive Guide to Form CGT 1 — ZIMRA External Guide — the per-disposal return on which the capital amount and Section 11 deductions are declared and the net CGT computed.