What is Capital Gains Tax (CGT)?
Capital Gains Tax (CGT) is a tax obligation on profits realised from selling assets. This encompasses property, shares, leases, goodwill, licences, foreign currency, contractual rights, and personal items exceeding $10,000 in value.
Key Exemptions
Primary residences generally qualify for exemption. Additional exemptions include personal vehicles and depreciated assets used exclusively for business purposes. Assets purchased before September 20, 1985 also escape CGT liability.
Calculation Methods
For properties held longer than 12 months, two calculation approaches exist:
1. Discount Method
Australian residents receive a 50% discount on capital gains.
2. Indexation Method
Available for pre-September 21, 1999 purchases, this approach adjusts the original purchase price using Consumer Price Index multipliers to reflect inflation.
Capital Losses
Losses can be carried forward indefinitely to offset future capital gains, though they cannot reduce general taxable income.
We recommend consulting with your accountant before making investment decisions.
This article does not constitute financial or legal advice.
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