Capital Gains Tax (CGT)

Whether it is a cherished family home or your investment property, when you sell it, it is essential to understand the capital gains tax that could be applicable in your circumstance.

Capital Gains Tax (CGT): Occurs when you dispose an asset such as a property, shares or collectables. A Capital Gains Tax is not a separate type of tax. The gain is added to your total income and taxed as per marginal tax rates according to your income threshold.

When does a CGT event occur:

• When you sell an asset
• Transfer, exchange, swap or trade an asset
• Loss or destruction of an asset

If you have made a capital gains or a loss:

• Capital Gains: Is when you receive more than what you spent
• Capital Loss: Is when you spent more than what you received

When are assets exempt from CGT:

• Acquired before 20 September 1985
• Main residence
• Partial main residence where you live and also operate a home-based business
• Exemption under the ‘Six-year rule’
• Exemption under the ‘Six-month rule’
• Personal Use assets

While the core concept of Capital Gains Tax (CGT) in Australia – taxing the profit from selling an asset – seems straightforward, its application can quickly become complex due to a variety of factors

• Ascertaining the cost base
• Ascertaining the proceeds
• The timing of occurrence
• Offsetting capital losses
• Capital improvements

Therefore, it is recommended you seek advice to gain the clarity you need. We are happy to assist you in working out your costs, capital expenses and also providing investment property related tax advice. Feel free to call us on 0405735555 for a no obligation phone call or email us at info@ps-accountants.com.au.