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What is Capital Gains Tax [CGT] in Australia_

Did you know that when you sell assets, thereu2019s a tax bill waiting for you?<br><br>Capital Gains Tax (CGT) is applied to profits made from asset sales in Australia. It is not a separate tax but is part of the income tax system. When you dispose of an asset and make a capital gain, you may be required to pay tax on that gain. Originally published at

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What is Capital Gains Tax [CGT] in Australia_

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  1. What is Capital Gains Tax [CGT] in Australia? Safe & Secure Did you know that when you sell assets, there’s a tax bill waiting for you? Capital Gains Tax (CGT) is applied to profits made from asset sales in Australia. It is not a separate tax but is part of the income tax system. When you dispose of an asset and make a capital gain, you may be required to pay tax on that gain. www.taxly.ai

  2. How is CGT calculated? First, You Need to Calculate Your Capital Gain: What is it? The capital gain is essentially the profit made from selling an asset. www.taxly.ai

  3. Now, Calculate the Base Cost: Include in Cost Base: The cost base comprises the purchase price, incidental costs (like legal fees for acquisition), and certain capital improvements. Exclude from Cost Base: Regular maintenance costs and interest on money borrowed for the purchase. www.taxly.ai

  4. What is the capital gains tax in Australia? Capital gains tax (CGT) is the levy applied to profits from selling your assets. Despite its designation as ‘capital gains tax,’ it is not a standalone tax but rather a constituent part of Australia’s income tax. When you sell assets (typically upon ceasing ownership), a CGT event is triggered, and you must disclose capital gains and losses in your income tax return. You may get a: Capital gain – which will increase your tax liability Capital loss – which will offset capital gains in the same fiscal year or in subsequent years. www.taxly.ai

  5. Assets on Which Capital Gains Tax (CGT) Does Not Apply: • Primary Residence (Generally exempt, but exceptions apply for business use or rental) • Personal Use Assets (Up to $10,000) • Certain Collectibles (Up to $500) • Cars, Motorcycles, and Other Personal Vehicles (Used for private purposes) • Depreciating Assets Used Solely for Taxable Purposes (Assets used solely for business) • Compensation and Insurance Payouts (Generally exempt unless they include an amount for lost www.taxly.ai

  6. In a Nutshell Capital Gains Tax is an integral part of the Australian tax system. It is triggered when you sell an asset and gain some sort of capital from the sale. You can claim a CGT discount if you sell an asset after 12 months of ownership. However, CGT discounts are not applicable to businesses. www.taxly.ai

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