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Capital Gains Tax

Capital Gains Tax

What is Capital Gains Tax (CGT)?

Capital gains tax (CGT) is the tax you pay when you make a net capital gain, so any profits, on a sale of an asset such as a property, business or shares. You need to report any capital gains or capital losses in your income tax return. You then need to pay tax on your capital gains. Despite the name, CGT is part of your income tax rather than being a separate tax.

There’s no fixed amount for CGT in Australia. If you’re a company, you pay up to 30% tax on any capital gains. For individuals, you pay the same rate as your income tax rate for that year and get a 50% CGT discount for assets you’ve had more than 12 months. For self-managed super funds, you pay 15% tax and receive a 33.3% discount for assets you’ve had more than 12 months.

How can you avoid or minimise CGT?

There are various ways to minimise the CGT you need to pay:

  • Keeping an asset for over 12 months entitles you to a tax discount if you’re an individual.
  • Offsetting capital gains with capital losses.
  • If you’re renting out your residential property, have it revalued. You’re only liable for CGT from the point of valuation.
  • For small businesses, take advantage of any CGT concessions and exemptions that apply to you.
  • Increase your asset cost base, which reduces the number of capital gains you receive and can be taxed on.

How can you calculate CGT?

The easiest way to calculate how much CGT you owe is to use the ATO’s CGT calculator. You can also use the tool to save your CGT records for the future.

Does CGT differ between states?

CGT rates are the same throughout Australia. You can expect to pay the same rates and have the same rules apply regardless of where you’re located or where your asset is located.

FAQs

Assets that you need to pay CGT on include:
  • Shares
  • Cryptocurrencies
  • Investment properties
  • Business vehicles and equipment
  • Commercial properties
You don’t have to pay CGT on certain assets such as:
  • Any assets acquired before 20th September 1985
  • Your main residence
  • Personal vehicles
  • Assets in an investment property that are depreciating
Whether you’re a business or an individual, taking steps to minimise your CGT is a sensible financial strategy. However, avoiding paying tax altogether is illegal. A tax professional can help to make sure you fulfil your obligations as a taxpayer but that you make your money and assets work for you.

Get in touch

The world of capital gains tax is a very complex one and can take an industry expert. Total Accounting Partners are equipped to help you navigate your obligations and solve your capital gains tax problems and concerns.

We’re professional tax specialists and can help you to make the most of your assets and reduce the amount of CGT that you need to pay.

Contact our team on the Sunshine Coast or in Redcliffe for honest and straightforward advice from taxation experts.