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The CGT system works by including the assessable gain on the disposal o

in News 15.04.2016 03:26
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Capital Gains Tax (CGT) was introduced in Australia on 20th September 1985. The tax applies only to assets quired on or after that date. Gains (or losses) on earlier assets called pre-CGT assets are ignored.CGT was introduced to reduce the inconsistency beeen the taxing of wealth and the taxing of ine. The CGT system works by including the assessable gain on the disposal of a CGT asset in the assessable ine of the entity disposing of it.What is a Capital Gains Tax (CGT)Put simply Danny Amendola Jersey , Capital Gains Tax is not a separate tax; it is part of your ine tax liability. CGT is the tax you pay on the difference beeen the amount you sell an asset for and the amount you paid for it.Capital Gains Tax in the context of the Australian taxation system applies to the capital gain made on the disposal of an asset, except for specific exemptions (e.g. the most significant exemption is the family ho).What is a Capital GainA capital gain will our when a capital asset is sold at a higher price than it cost you. For example:• When you sell an asset for more than what you paid for, this is referred to as a "capital gain" , and• If you sell an asset for less than what you paid for, this is referred to as a "capital loss"Whether you make a capital gain or not depends on the purchase price of an asset pared to its selling price.A capital gain usually has a different aning for the tax departnt, the economists and the aountant.Is a Capital Gain Treated as Taxable IneYes, Capital Gains Tax operates by having capital gains treated as taxable ine in the tax year an asset is sold or otherwise disposed of.It is important to note Duron Harmon Jersey , that a Net loss in a tax year cannot be offset against any ine. But, the loss can be carried forward to be deducted against any capital gains in future years.What is a Capital Gain DiscountIf the asset is held for at 1 year and you have determined the total capital gain, the CGT discount can then be applied. The total gain on the assessable ine is first discounted by:• 50% for individuals taxpayers, or• 33.3% for self-managed superannuation fundsCompanies and other trusts are not entitled to a CGT discount.What Assets are Liable for Capital Gains TaxAll assets are subject to the CGT rules unless they are specifically excluded. Capital gains and losses in a given tax year are totalled into three separate asset categories aording to the class of the asset. The three separate asset categories are:Collectables: This category includes assets quired for above $500.00 and used for personal enjoynt, such as:• Boats• Furniture• Electrical equipnt, etc.Personal Use Assets: This category includes assets quired for above $10,000 used for personal use Patrick Chung Jersey , such as:• Paintings• Art• Jewellery• Postage Stamps• Antiques• Coins, etc.All Other Assets: This category includes assets that are not categorised as collectables or personal assets, such as:• Land• Shares in a pany• Rights and Options• Leases• Units in a Unit Trust• Goodwill• Licences• Convertible notes• Your ho or unit• Foreign Currency• Contrtual rights• Any major capital improvent made to certain land or pre-CGT assetThe existence of separate categories for collectables and personal use assets works to prevent losses from them being offset against other gains, such as from investnts. This works to prevent taxpayers subsidising hobbies from their investnt earnings.What Assets are exempted from Capital Gains Tax (CGT)A Capital Gains Tax exemption applies to:• An asset owned outright• A partial interest in an asset, and• To both tangible and intangible assetsThe current Capital Gains Tax (CGT) exemptions are:• Any asset quired before 20th September 1985, known as a pre-CGT asset• The house, unit Tarell Brown Jersey , etc. which is the taxpayers main residence and up to 2 hectares of adjent land used for dostic purposes• Collectables quired for up to $500.00 used for personal enjoynt• Personal use assets quired for up to $10,000 used for personal use• Capital loss made from a personal use asset (i.e. any capital loss you make from a personal asset is disregarded)• Car and other small motor vehicles, such as, motorcycles (small being a carrying capity less than 1 tonne and less than 9 passengers)• Compensation for an oupational injury, or for personal injury or illness of oneself or a relative• Life insurance policies surrendered or sold by the original holder• Winnings or losses from gambling (which are free of ine tax too)• Bonds and Notes sold at a discount (gains and losses from these e under ordinary ine tax)• Medals and decorations for bravery and valour, provided they are quired for no cost• Shares in a pooled developnt fund• Paynts under particular designated governnt sches (e.g. various industry restructuring sches)What is a CGT EventA taxpayer can only make a capital gain or a capital loss if a CGT Event happens. The CGT events include:CGT Event A1 - The disposal of a CGT asset, which covers a change of ownerip (e.g. by sale or giving away) of assets such as:• Shares• Units in a Unit Trust• Debt Securities• Land and Buildings• Works of Art Alan Branch Jersey , etc.CGT Event C2 - The cancellation, surrender or similar endings of a CGT asset, which would cover:• The redemption of units in a Unit Trust (where the units are extinguied)• The expiry of an unexercised option, or• The redemption and cancellation of a debentureThere are approximately 50 different CGT events and most individuals will never experience many of these events.What happens when an Asset is owned by more than one personMany assets purchased can be held in the following ownerip types:Joint Tenants - When an asset is owned under a "joint tenan.

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