What is Capital Gains Tax (CGT)?

Capital gains tax (CGT) is the tax you pay on profits from selling assets, such as property or shares.

The capital gain (or loss) is the difference between what it cost you and what you get when you sell (or dispose of) it.

You report capital gains and capital losses in your income tax return and pay tax on your net capital gains after offsetting the losses. Note that according to current tax legislation the 50% general discount may apply. Although it is referred to as ‘capital gains tax,’ it is part of your income tax. It is not a separate tax.

If you have a capital gain, it will increase the tax you need to pay. You may want to work out how much tax you will owe and set aside funds to cover it. We can assist you with a preliminary tax estimate on your capital gains prior to selling the asset/investment.

To make things a little more complex the ATO also has a list of CGT assets and exemptions.

Keep in mind, that many types of asset disposals are reported by various agencies to the ATO and they cross match what is submitted in the tax return with the information provided through agencies.

If you think there are asset disposals that you suspect might be liable for CGT don’t hesitate to get in touch with us to consider any CGT implications.