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Capital Gains Tax (CGT)



What is CGT?

CGT is a tax you pay on any capital gains you make. This must be included on your annual income tax return.

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How is it paid?

CGT is not taxed separately. Instead, it forms part of your income tax. A person is taxed on their net capital gain at their marginal tax rate.

A person makes a capital gain when the proceeds they receive from the sale of a CGT asset is more than the cost base they paid for the purchase of that CGT asset. Conversely, a capital loss is made when the proceeds from a sale of a CGT asset is less than the cost base used to acquire it in the first place.

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What is the importance of a capital loss?

Although a loss is generally not the aim of most businesses, the upside to it is that it can be carried forward to later years to be deducted from future capital gains (but not income). There is no time limit on how long a person may carry forward a net capital loss, and net capital losses are applied in the order that they are made.

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What are CGT events?

A capital gain or a capital loss can only happen when a CGT event happens. Some examples of a CGT event may be where a person buys shares and then later sells them; or when a trust is created over a CGT asset; or when a lease is granted.

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What about my home?

Your main residence is exempt from CGT.

Although this may be obvious for most people, there are situations where it may be unclear as to whether certain property would be called ‘main residence’ for CGT purposes. In determining whether a property is a ‘main residence’, the following are relevant considerations:

  • The length of time you have lived there
  • Whether your family lives there
  • The address to which your mail is delivered
  • Your address according to the electoral roll
  • Your intention for living there.

It is also noteworthy to know that if a home ceases to be your main residence, a taxpayer may nevertheless continue to treat it as if it were their main residence.

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 If you would like more information or assistance regarding CGT or other tax related matters, complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange an appointment.