Capital Gains

CGT - Capital Gains Tax

CGT (Capital Gains Tax) is a tax you pay when you sell an asset or investment and receive a profit.

Selling an asset, such as property or shares, will usually result in a capital gain or loss for your business. An asset's value is determined by how much it costs to acquire and how much it's worth when you sell or dispose of it.

You need to report capital gains and losses in your income tax return and pay tax on your capital gains. Although it's referred to as capital gains tax (CGT), this is part of your income, not a separate tax.

Certain types of CGT assets, including collectibles, personal use assets, investments, leases, and options, are subject to special rules.

Working out a capital gain or loss

Generally, a capital gain arises from a CGT event if the capital proceeds exceed the asset's cost base. Conversely, a capital loss arises if the reduced cost base of the CGT asset exceeds the capital proceeds from the CGT event.

Taxpayers who acquired the CGT asset at least 12 months before the CGT event are entitled to the CGT discount on their capital gains. The discount percentage is as follows:

  • 50% for Australian resident individuals
  • 33 1/3% for complying superannuation entities and eligible life insurance companies
  • special rules apply to foreign resident individuals.

If indexation produces a lower capital gain, taxpayers can choose that method rather than the CGT discount. CGT discounts are generally not available to companies, but indexation is an option. The discount capital gains made by trusts can generally be passed through to presently entitled beneficiaries, who can claim the discount percentage as described above. Discounts are available to trustees who are taxed on capital gains.

Losses on capital assets can only be deducted from capital gains, not from other income sources. To ensure the maximum reduction of capital gains for the CGT discount and small business CGT concessions, it is important to take care when applying capital losses. A net capital loss in an income year is carried forward to be offset against capital gains in later income years.

Exemptions, rollovers and concessions

A wide range of exemptions and rollovers apply. In addition to the generally available exemptions and rollovers, small business entities are eligible for the small business CGT concessions.

It takes an industry expert to understand the world of capital gains tax. We at TAS Tailored Accounting Solutions are equipped to assist you in navigating your obligations and resolving capital gains tax concerns.

With our help, you can make the most of your assets and reduce your CGT liability.

Contact our team honest and straightforward advice from taxation experts.

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CGT (Capital Gains Tax) is a tax you pay when you sell an asset or investment and receive a profit.

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