What is Capital Gains Tax and could you be liable?

Have you sold any assets? Could you be liable for Capital gains tax? 

Capital gains tax (CGT) in Australia is a tax levied on the profit or gain made from the sale of an asset that was acquired after 19 September 1985. This includes assets such as real estate, shares, and other investments including Cryptocurrencies.  

The amount of CGT payable is calculated by subtracting the cost base (or acquisition cost) of the asset from the sale proceeds, and then applying the CGT rate to the resulting capital gain. The CGT rate for individuals is generally equal to your marginal tax rate, with a 50% discount applied if you have held the asset for at least 12 months.  

However, some assets, such as personal use assets (e.g. a family home), are exempt from CGT under certain conditions, and other exemptions may apply in certain circumstances (such as for small business assets).  

It is important to note that CGT is only triggered when the asset is sold, and not when it is held or bought. Additionally, losses from the sale of an asset can generally be used to offset capital gains from other assets in the same financial year. Capital losses cannot be offset against other income and may be carried forward for use against capital gains in future years.  

Overall, the rules around CGT can be complex, and it is recommended that individuals seek professional advice to ensure compliance with tax laws and to optimise their tax position. This is best done before you sell or dispose of an asset so that you can understand the consequences. 

If you would like our assistance with your capital gains events please get in touch with our Tax team here at Aegis Business Services.