If you sell a capital asset, such as real estate or shares, you usually make what is known as a capital gain or a capital loss. This is the difference in value between the cost to acquire the asset, and the balance received when the asset is sold or otherwise disposed of. You need to report capital gains and losses in your income tax return and pay the relevant capital gains tax (commonly referred to as "CGT"). When you make a capital gain, it is added to your assessable income and may significantly increase the tax you need to pay.
Abbotts can provide comprehensive advice on CGT issues as well as the legislative requirements that you need to be aware of. We can also assist you to account for the capital gain as a result of a CGT event.
We can assist you with an array of services related to CGT, including:
- Planning for Capital Gains Tax
- Exemptions and Concessions
- International Issues
Planning for Capital Gains Tax
Abbotts can assist you with planning for payments of capital gains tax, by understanding how it applies to your circumstances.
This includes looking at issues such as - determining whether a CGT event has happened, what the timing of the CGT event is, if the assets are subject to CGT legislation, how capital gains or losses are calculated, and whether there are exceptions or concessions available.
Understanding this starts with good record keeping. Keeping adequate records of all expenditure will help you correctly work out the amount of capital gain or capital loss you have made when a CGT event happens. It will also help to make sure you do not pay more CGT than is necessary. We can guide you through what records need to be kept, and assist with the planning of asset disposals and other events that may fall under CGT legislation.
Exceptions and Concessions
All assets acquired since capital gains tax started are subject to CGT unless specifically excluded. There are however exemptions and rollovers that may allow you to reduce, defer or disregard your capital gain or capital loss. In addition to the exemptions, there are small business concessions that allow you to disregard or defer some or all of a capital gain from an active asset used in a small business.
Abbotts can provide comprehensive advice and assist you with defining whether an exception exists, or provide guidance on any applicable small business concessions that you are entitled to.
Differing applicability rules apply to people based on their residency status. Australian residents have different rules to foreign residents. Temporary residents also have specific limitations on which CGT events apply and the range of assets those events apply to. But what is an 'Australian resident'? When do you become or stop being one? What other rules apply?
Abbotts can answer all of those questions, and help you know where you stand regarding international CGT issues.
Partner, Abbotts Chartered Accountants
David is our Tax Specialist and has worked in the tax and accounting field since 1982. David spent several years early in his career working in the ATO. He joined the Abbotts team in 1997 and became a Partner of the Practice in July 2000.
Stephen is a Senior Associate of the Practice. He joined the firm in January 2000 and brings with him many years of experience in Taxation and Business Services. He is an Associate of the Institute of Chartered Accountants in Australia since 1989, and a member of the Chartered Accountants (UK) since 1991.
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