This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
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Capital gains tax is the tax you pay on any capital gain you make and include on your annual income tax return. There is no separate tax on capital gains, it is merely a component of your income tax. You are taxed on your net capital gain at your marginal tax rate.
Your net capital gain is:
your total capital gains for the year
your total capital losses (including any net capital losses from previous years)
any CGT discount and CGT small business concessions to which you are entitled.
You may make a capital gain from most CGT events, if your capital proceeds are greater than your cost base-for example, if you received more for an asset than you paid for it. You make a capital loss if your reduced cost base is greater than your capital proceeds. You can also make a capital gain if a managed fund or other trust distributes a capital gain to you.
We may have used some terms that are not familiar to you. These words are explained in Explanation of terms.
While we have sometimes used the word 'bought' rather than 'acquired', you may have acquired an asset without paying for it (for example, as a gift or through an inheritance). Similarly, we refer to 'selling' an asset when you may have 'disposed' of it in some other way (for example, by giving it away or transferring it to someone else). For the purposes of this guide, all of these 'acquisitions' and 'disposals' are CGT events.
Generally, you can disregard any capital gain or capital loss you make on an asset you acquired before 20 September 1985 (pre-CGT). For details of some other exemptions, see Exemptions and roll-overs.
There are special rules that apply when working out gains and losses from depreciating assets. To the extent that a depreciating asset is used for a taxable purpose (for example, in a business) any gain is treated as ordinary income and losses as deductions. A capital gain or capital loss may arise only to the extent that a depreciating asset has been used for a non-taxable purpose (for example, used privately). For details on the CGT treatment of depreciating assets, see CGT and depreciating assets.
If you are completing your entity's tax return, capital gains are shown at the following items:
- item 7Company tax return 2002
- item 18Trust tax return 2002 or
- item 9Fund income tax and regulatory return 2002.
If you are an individual, you show your total current year capital gains at H item 17 on your tax return.
You show your net capital gain at A item 17 on your tax return.
To work out whether you have to pay tax on your capital gains, you need to know:
Last modified: 06 Oct 2009QC 27417
- whether a CGT event has happened (this is the question asked at G item 17 on your tax return)
- the time of the CGT event
- how to calculate the capital gain or capital loss
- whether there is any exemption or roll-over that allows you to reduce or disregard the capital gain or capital loss
- how to apply any capital losses
- whether the CGT discount applies
- whether you are entitled to any of the CGT concessions for small business.