Capital Gains Tax Overview
A capital gain occurs when you sell a capital asset for more than what you paid for it.
Most property is considered a capital asset. You have to pay for the capital gain made in
current income tax year.
Capital Gain Tax Rate
Capital gains tax rate varies, depending on these conditions:
- Type of asset
- Holding period of the asset
- Your ordinary income tax bracket
Capital Loss
If your total capital losses for the year are more than your total capital gains, the
difference is your net capital loss for the year. Capital losses can be carried forward to
later income years to be deducted from future capital gains. You cannot deduct a net
capital loss from your income. A capital loss can only be offset against a capital gain.
Method used to calculate the capital gain
- Indexation method If a capital gains tax event happens to an asset you acquired before 11.45am (ACT) on 21 September 1999, and you owned the asset for 12 months or more, you can use indexation method, index depends on the sales date.
- Discounted methodIn order to be eligible for the 50% discount method you must own the property for a full year.
- Other method; If you have bought and sold your asset within 12 months or, generally, for capital gains tax (CGT) events that do not involve an asset, you can use this method by simply deduct acquisition cost from sale revenue
Capital Gains Tax can be a complex area of the tax system and there are various exemptions that apply, if you think you have a capital gains tax event it is best to talk to an Accountant as soon as possible.
For an appointment, or a confidential discussion of your needs, please contact our Tax Accountants today, or call 1300 627 829.
