Capital Gains Tax (CGT)
If you sell a capital asset, such as real estate, shares, cryptocurrency, good will, businesses and shares you usually make a capital gain or a capital loss except specific exemptions. This is the difference between what it cost you to acquire the asset and what you receive when you dispose of it.
You need to report capital gains and losses in your income tax return and pay tax on your capital gains. Although it's referred to as capital gains tax (CGT), this is actually part of your income tax, not a separate tax.
When you make a capital gain, it is added to your assessable income and may significantly increase the tax you need to pay. As tax is not withheld for capital gains, you may want to work out how much tax you will owe and set aside sufficient funds to cover the relevant amount.
If you make a capital loss, you can't claim it against your other income but you can use it to reduce a capital gain.
All assets you’ve acquired since tax on capital gains started (on 20 September 1985) are subject to CGT unless specifically excluded.
Small Business Concessions – are you entitled?
When certain conditions are met small business CGT concessions may apply:
- Small business 15-year exemption
- Small business 50% active asset reduction
- Small business retirement exemption
- Small business roll-over
It is important that clients seek our advice before committing to the sale of an asset that may be subject to CGT. Planning the time of a sale can save thousands of dollars in tax.
Taxation minimisation strategies can make a big difference to your wealth creation and tax planning. Our expert team use their extensive knowledge and experience of Australian taxation legislation to ensure the best possible outcome for you or your business with targeted and comprehensive tax advice.