Having established in previous lessons that capital gains tax (CGT) exists as a separate and autonomous tax imposed under the Capital Gains Tax Act [Chapter 23:01], the logical next step is to examine how and when the tax is actually charged. This lesson therefore focuses on the charging provision—the statutory rule that creates the legal obligation to pay CGT.

This lesson is foundational because no capital gains tax can arise unless the charging section applies. In both examinations and real-life tax practice, CGT disputes almost always begin with the question: Is there a charge to tax at all? If the charge fails, everything else—valuation, exemptions, rates, payment—falls away. For this reason, examiners expect candidates to identify, quote, and apply the charging provision with precision.

B. LEGISLATIVE FRAMEWORK

The charge to capital gains tax is created by section 6 of the Capital Gains Tax Act [Chapter 23:01].

Section 6 provides as follows:

“Subject to this Act, there shall be charged, levied and collected throughout Zimbabwe a tax to be known as capital gains tax in respect of every capital gain accruing to a person from the disposal of a specified asset.”

This single sentence performs several critical legal functions simultaneously. It:

1. 1. Establishes the existence of the tax
2. 2. Names the tax
3. 3. Defines the scope of application
4. 4. Identifies the taxable event
5. 5. Links the charge to defined concepts elsewhere in the Act

Each phrase must therefore be interpreted carefully and in its statutory context.

C. DETAILED CONCEPTUAL EXPLANATION

The phrase “subject to this Act” is of immediate importance. It signals that the charge to capital gains tax is not absolute, but operates subject to other provisions within the Act. This means that exemptions, exclusions, reliefs, roll-overs, and special rules contained elsewhere in the statute can override or modify the charge. In practice, this wording prevents section 6 from being applied in isolation and requires the taxpayer or examiner to read the Act as an integrated whole.

The words “there shall be charged, levied and collected throughout Zimbabwe” establish the compulsory and nationwide nature of capital gains tax. The use of the word shall indicates that the imposition of the tax is mandatory, not discretionary. Once the conditions of section 6 are satisfied, neither the taxpayer nor ZIMRA has a choice as to whether the tax applies—it arises by operation of law.

The section then introduces the taxable amount by referring to “every capital gain”. Importantly, the Act does not tax capital receipts or gross proceeds. It taxes only the gain. This confirms that capital gains tax is concerned with net economic enrichment, not turnover. The identification and measurement of a capital gain therefore become essential steps, addressed later in the Act through computation provisions.

The requirement that the gain must be “accruing to a person” reflects a fundamental principle of Zimbabwean tax law: tax is imposed on entitlement, not necessarily on physical receipt. A gain accrues when a person becomes unconditionally entitled to it, even if payment is deferred. This principle aligns capital gains tax with long-standing income tax jurisprudence and prevents avoidance through timing arrangements.

The phrase “from the disposal” introduces the taxable event. Capital gains tax is a realisation-based tax. Mere appreciation in the value of an asset does not give rise to tax. The gain must arise from a disposal event that crystallises the increase in value. Without a disposal, there is no charge, regardless of how valuable the asset has become.

Crucially, the disposal must relate to “a specified asset”. This limits the scope of capital gains tax to assets that Parliament has expressly brought within the CGT regime. The definition of a specified asset is contained in section 2 of the Act, and includes, among others, immovable property and marketable securities. This means that not all assets are subject to CGT, and the first practical step in any CGT analysis is to determine whether the asset disposed of is a specified asset.

Taken together, section 6 establishes that all five elements must be present simultaneously:

1. 1. There must be a capital gain
2. 2. The gain must accrue to a person
3. 3. The gain must arise from a disposal
4. 4. The disposal must involve a specified asset
5. 5. No exemption or overriding provision must apply

If any one of these elements is absent, the charge to capital gains tax fails.

D. ZIMBABWEAN REAL-WORLD EXAMPLES

Consider an individual example. Mr Moyo purchased a residential stand in Ruwa in 2015 for USD 20,000. In 2025, he sells the property for USD 80,000. The property is immovable property and therefore a specified asset under section 2. The sale constitutes a disposal, and the increase in value represents a capital gain. Under section 6, a charge to capital gains tax arises, subject to any applicable exemptions such as principal private residence relief.

In an SME example, a small property development company sells a warehouse that it held as an investment. The warehouse is immovable property, the sale is a disposal, and the gain accrues to the company. Section 6 applies regardless of the company’s size, confirming that CGT is not limited to large corporates.

In a corporate example, a holding company disposes of shares in a subsidiary. Shares are marketable securities and therefore specified assets. Any gain realised on disposal is subject to CGT under section 6, unless a specific exemption or roll-over relief applies.

E. CASE LAW INTEGRATION

Zimbabwean case law on capital gains tax is relatively limited due to the statutory clarity of section 6. However, courts have consistently applied the broader tax principle that tax liability arises only where the charging section is satisfied. This principle mirrors income tax jurisprudence and reinforces the strict interpretation of charging provisions in revenue law.

Where disputes arise, courts tend to focus on whether a disposal occurred and whether the asset qualifies as a specified asset, rather than on valuation alone.

F. COMMON PITFALLS & TRICKY AREAS

• A frequent student error is assuming that any sale automatically attracts capital gains tax. This is incorrect. The sale must involve a specified asset and must give rise to a capital gain.
• Another common mistake is confusing capital gains tax with income tax, particularly where assets are sold in the course of trade. In such cases, the proceeds may fall under income tax instead of CGT, depending on the nature of the transaction.
• Practitioners also sometimes overlook the phrase “subject to this Act”, failing to consider exemptions or special provisions that override the charge.

I. KEY TAKEAWAYS

• 1. Capital gains tax is charged under section 6 of the CGT Act
• 2. The charge is compulsory but subject to the Act
• 3. CGT applies only to capital gains, not gross proceeds
• 4. A disposal is essential for CGT to arise
• 5. Only specified assets fall within the CGT regime
• 6. Each element of the charge must be satisfied
• 7. The charging section is the starting point of all CGT analysis

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