Capital Gains Tax (CGT)

Capital gains tax (CGT) is the type of tax which is calculated separately but is added to your income tax and in fact is part of it to be lodged. Capital gains are the surplus of proceedings received as a result of selling an asset compared with the purchase price. Consequently, if an asset is sold at a price lower than the purchase cost, it is called capital loss.

 

When can be said that CGT has occurred?

 

  • When capital gains are earned for the assets acquired after 20 September 1985, and

  • When the first proceedings from the sales are received.

 

CGT Exemptions:

 

  • Assets which are used for personal use like but not limited to the main residency property, cars, and furniture.

  • Depreciating assets used in business to generate taxable income

  • Shares and units sold by a share trader as the source of income, which is subject to income tax

 

CGT Applicability:

 

Same as income tax, all Australian are subject to CGT on global bases while foreigners pay for capital gains if CGT event happens.

 

Note: it is necessary to maintain records of all transactions related to the assets from the purchases, additions, and sales documents since the rules and the rates depend on these details.

 

 

CGT does not apply on the assets bought before 20 September 1985 or the inherited assets. For the assets acquired through inheritance, especial rules apply.

 

CGT Event:

 

  • When the asset is sold, CGT event has happened.

  • When managed funds or trust distribute to the beneficiaries.

  • When the asset is destroyed or obsolete

 

There are some roll-over reliefs, exemptions and CGT concession which reduce the amount of CGT payable. Roll-over relief defers the CGT amount to future.

 

Capital Loss Treatment:

 

These losses can be carried forward to offset the next financial year capital gains only.

 

Due to the complexity of CGT, do not hesitate to contact us to benefit from reducing your CGT amounts by applying all exemptions, rollovers, and concessions.