Capital Gains
A capital gain or a capital loss is made when a CGT event is triggered. For most of these events the gain is the difference between the capital proceeds and the cost base of the CGT asset. This means that if you sell an asset for more than what you paid for it, the difference is the capital gain.The opposite is true for a capital loss, if you sell an asset for less than what you paid for it you realise a capital loss. Capital gains tax only applies if you acquired the asset after 20 September 1985.

The most common type of CGT event is when you dispose of a CGT asset  to someone else, either by selling or giving it away to a third party. It is important to know that a CGT event can happen on any of their assets held around the world.

It is important to know that a capital loss cannot be offset against your income, it can only be offset against other capital gains. If your net capital losses for the financial year exceed your capital gains the loss can be carried forward to future years.





What is a CGT Asset?
The following assets are CGT assets:

• Real estate – rental properties, holiday homes
• shares in a company
• units in a unit trust or managed fund
• collectibles – for example, jewelery, and
• personal use assets – for example, furniture.

Other CGT assets included, but not so well understood are:

• contractual rights
• options
• foreign currency, and
• goodwill.

Capital Gains Tax
Capital gains tax is a not a separate tax, but it is a component of your income tax. Because of this the rate you pay in capital gains tax depends on your other income.


Do I have to pay CGT?
To determine whether you need to pay capital gains tax you need to know the following information:

• whether a CGT event has happened
• the date the CGT event occurred
• which assets are subject to CGT
• the date and the amount of any expenditure you incurred that forms part of the assets cost base
• the amount of money or value of property you received - or were entitled to receive.

Calculating your gain or loss
To determine your capital gain or loss you can refer to the Australia Tax Office website. But generally if you have held the asset for a minimum of 12 months you are entitled to a 50% reduction (Individuals/Trusts) or a 33.33% reduction (Super funds) in capital gains tax.

You can access more information from the ATO website at www.ato.gov.au