Capital Gains Tax Decree 2011


1. Capital Gains Tax (CGT) now applies in Fiji. The Capital Gains Tax Decree 2011(Decree) was published on 16 May 2011 and its effect is backdated to 1 May 2011. Those parts of the Land Sales Act taxing profits on land sales have been repealed.

2. The Decree imposes CGT at the rate of 10% on capital gains on the disposal of certain capital assets. The Decree will impact many capital disposals. Owners of affected assets now need to consider the CGT consequences of sale/disposal of those assets. The Decree is also likely to increase the time it takes to settle land transactions.

3. Two broad features to note are:

(a) the cost of capital assets for CGT purposes is not indexed in any way. It is understood that the policy reasons for this are to ensure simplicity in the application of the tax, the “trade-off” being the relatively low tax rate applied

(b) Fiji CGT is a transaction tax rather than a form of income tax. Capital gains do not form part of assessable income (and accordingly cannot be offset by deductions for usual expenditure, etc). Affected capital disposals are taxed separately and must be returned for separately.

What gains are taxed

4. Gains made on the disposal of capital assets are taxed. A capital asset is defined to include:

(a) land, buildings and improvements on land, and any interest in land such as a lease

(b) vessels of over 100 tonnes

(c) yachts and aircraft

(d) shares and other financial assets

(e) intangible assets and

(f) an option, right or interest in any of the above assets.

Assets that are trading stock for the purposes of the Income Tax Act (ITA) are excluded.

Residency issues


5. A resident is taxed on the capital gain made on the disposal of capital assetswherever located. A resident for the purposes of the Decree means a “resident” as defined in the ITA1, a resident trust and a resident partnership. So, for example, a Fiji resident must pay CGT on the disposal of an asset if it is located overseas2. Some exemptions are available to residents (see below).


6. A non-resident pays CGT only on capital assets that are Fiji assets. Fiji assets are defined to mean:

(a) land, structural improvements to land, or an interest in land or structural improvement to land, including a lease where the land is located in Fiji

(b) a share in a company, or interest in partnership or trust, if the assets of the company, partnership, or trust are solely or principally Fiji assets under the above paragraph

(c) a capital asset of a fixed place of business in Fiji

(d) a share, security, equity, or other financial asset issued by a resident person

(e) an interest in a resident partnership or resident trust or

(f) an option, right or other interest in an asset referred to in above

So CGT applies if, for example, an Australian company sells shares in a Fiji subsidiary.

Important concepts

7. CGT is levied on capital gains on the disposal of capital assets, other than an exempt capital gain. A capital gain for the purposes of the Decree is defined as consideration received on the disposal less the cost of the asset at the time of the disposal. So the concepts of disposalconsideration received and cost in the context of the Decree are important.


There is a disposal of an asset when a ‘person parts with the ownership’ of it. This includes when the asset is exchanged, transferred, distributed, cancelled, redeemed, relinquished, destroyed, lost, expired or surrendered. So loss of a building by fire would be a disposal.

Consideration received

9. Consideration received is the total amount received by a person for the asset including the fair market value of any consideration received in kind. Consideration received for an asset that has been lost or destroyed includes any compensation, indemnity or damages received. If FRCA considers a transaction to be non-arm’s-length, FRCA may deemed it disposed of at fair market value (meaning “ordinary open market value”).


10. Cost includes consideration paid for the asset or its development, including construction costs, incidental expenditure in acquiring or disposing of it and expenditure incurred in installing, renewing or improving it. So it becomes more important to ensure good record-keeping of expenditure which may qualify as “cost(s)” for CGT purposes.


11. Certain capital gains are exempt from tax including:

(a) in case of a resident individual or a Fiji citizen, a gain below F$20,000

(b) a gain on the disposal of an individual’s principal place of residence if it was the individual’s residence during the whole of the period the individual owned it3

(c) a gain made on the disposal of shares listed on the South Pacific Stock Exchange.


12. Recognition of a capital gain is deferred (to when the asset is later disposed of):

(a) in the case of loss, destruction or compulsory acquisition, where consideration received is reinvested within one year of receipt to replace the asset disposed of

(b) for matrimonial settlements

(c) for transfers of property after death.


CGT returns and payment

13. A person liable for CGT is required to pay the amount of CGT and file a CGT return within 30 days of the disposal of the capital asset. The Tax Administration Decree applies to the Decree, meaning the same procedures apply to collection, enforcement and disputes concerning CGT as with other taxes.

Land registration

14. The Decree prohibits the Registrar of Titles from registering a transfer unless s/he receives a certificate from the CEO of FRCA stating that either CGT is not payable or it has been paid or satisfactory arrangements for its payment has been made. We have not been told what arrangements will be made for timely delivery of certificates. This issue has the potential to slow real property settlements.

Conclusion and comment

15. The wisdom of imposing CGT at this time will no doubt be a matter of debate. The Decree will impact many capital asset transactions. CGT consequences must now be considered before considering these transactions. The returns and payment requirements are also potentially burdensome, as is possible delay, especially in land transactions, that the administration of this Decree may cause.

16. On the “plus” side is the possibility that sales of capital assets will result in fewer disputes with FRCA in respect of income tax (FRCA has been quick to issue aggressive income tax assessments for “dealing” in respect of those sales) and Land Sales Tax. In theory it is now more certain that these sales will be taxed at 10% of gain and no more. Time will tell.


Richard Naidu
Direct Dial +679 322 1816

Rajnil Krishna
Direct Dial +679 322 1814

for further information.

1. which includes individuals ordinarily residing in Fiji and Fiji incorporated companies
2. Although the resident will get a tax credit for any “foreign tax” paid on the disposal
3. We believe the definition of principal place of residence is unnecessarily complex. It may become contentious and lead to delays in settling property transactions.


The information and opinions in this Legal Alert are for general information purposes only. They are not intended as specific legal or other professional advice and should not be relied upon or treated as a substitute for specific advice. Munro Leys can accept no responsibility for any loss arising from reliance on the general information contained in this Legal Alert.

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