Capital Gains Tax
Capital Gains Tax
What is Capital Gains Tax?
When you sell an asset, real estate, shares, luxury items, collector items etc, usually you will make a profit or a loss, this difference is then taxed in your personal tax return, so technically it’s not a separate tax, and this type of tax is not usually withheld from the sale of the asset, so you need to plan in advance and keep any amounts you need to pay for the gain.
However if you make a capital loss, you are unable to reduce your personal tax, though you are able to reduce any other capital gain in the future so ensure your accountant is keeping track of the loss in your tax return.
Any assets bought after 20 September 1985, are all subject to Capital Gains Tax except for your main residence, your motor vehicle and other personal items.
The time the amount of the Capital Gains Tax is calculated, is the day you enter the contract not the day you receive the sale amount, if it is on the same day that your receive the amount of monies as the contract date, then the first time is the contract date.
Capital gains tax is a tax on your worldwide assets, whether in Australia or overseas.
What records do I need to keep for Capital gains Tax?
You need to firstly establish the date of acquisition, from that date, you need to keep records of every transaction that can create the capital gain or loss of the sale of the assets. These records may also assist your beneficiaries realise the gain or loss if you unexpectedly die.
What are the Capital Proceeds in a Capital Gains Tax Event?
Whatever your sale amount of the asset is this is called the Capital Proceeds amounts.
If I am an individual am I entitled to any discount for Capital Gains?
If you have held the asset that you have sold for more than 12 months, you are entitled to a 50% discount, which in essence you only pay tax on half the amount and if you are not an Australian resident this rule does not apply to you, therefore foreign and temporary residents are not entitled to these discounts.
Capital Gains Tax Calculation methods.
There are three methods you can use to calculate the capital gain or capital loss, there is the indexation method, the discount method and the other method rule.
Special rules about losses.
Losses from personal collectable items cannot be deducted from gains you make on real-estate or shares, losses of this kind and or gains from personal assets are not counted towards a capital gain.
Captail Gains Tax Checklist
We understand that is difficult to collate all the paperwork when you you have a capital gain or capital loss, hence we have devised a list of items to help you reduce your capital gains items that you may have missed, this comprehensive list will assist you in minimising your capital gain, to ensure the correctness of your list of items needed please fill out the form below so we can send you the list of items you will need.