Naturally, you will pay capital gains tax upon the sale of certain capital items. Exemptions are detailed below. CGT is not a separate tax as such, but is included within you income tax return, and is paid at your marginal tax rate. Therefore, the higher your income, the potentially greater amount of tax that you will pay.
Most tax payers trigger a capital gain or loss when they sell assets such as land, investment property, shares or managed funds investments. But be warned, exceptional record keeping is needed if you wish to avoid paying CGT, or to reduce your liability to pay CGT.
The CGT came into effect on the 20th of September 1985. All assets that have been acquired since then, whether purchased or inherited, are subject to CGT rules, including options, legal rights, and business goodwill, unless specific legislative exclusions apply.
What is exempt from CGT?
Individuals are exempt from CGT on the following items:
- Your main residence (home)
- your car, motorcycle or similar vehicles
- personal use assets that you acquired for a price of less than $10,000, but receipts will be required to prove what you paid, and when you acquired the item.
Like all Australian tax law there are other exemptions, rollover's, and concessions which can allow you to temporarily ignore, postpone, or reduce your capital gain or loss. Under certain circumstance taxpayers may also have a choice between using an indexed cost base, or a discount method when calculating their tax liability.
Resident Australians vs Non Residents
Australian residents are subject to CGT on assets owned anywhere in the world.
Non residents are subject to CGT on taxable Australian property.
Retirement exemptions
There are currently exemptions available for certain classes of people who retire in Australia.
How we can help you:
This has become a very complex and convoluted area of tax law. We ensure we are continuously up to date on legislation changes, and therefore we are able to offer you accurate advice and top quality assistance. When needed we can source legal opinion, from our network of contacts, on your situation. Many transactions need careful consideration before they are undertaken, in order not to trigger or incur a CGT liability. We can help to step you through these procedures.
Need more assistance? Why wait?
Contact us now to make an appointment.
- Either telephone us on 03 5571 2774,
- or email us using the form opposite.
It will only take a minute of your time.
Contact us for a friendly, no obligation, exploration of your CGT needs.
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Last updated Monday 13th February 2012
© Peter Mulcahy 2011