4. Capital Gains Tax Flashcards
What is CGT basically?
The tax legislation under s. 102.5 includes net capital gain as assessable income under s. 6-10 statutory income
How to simply work out if there is a CGT event?
Did a CGT event happen this income year?
Does an exemption apply? (if yes, disregard)
Does the capital proceeds exceed the cost base? Yes - this is a capital gain. No, made a loss - this is a capital loss, if there is no difference in loss/gain then no event.
What is the ordering rule in CGT?
Its where more than one CGT event happens in a particular situation, The application of the more specific CGT event usually takes priority over the more general event. (Healey v FCT)
How are CGT events divided up?
There are 12 CGT event subdivisions and all have different rules to follow and how to calculate in s. 104-5
What is an example of different timings of when a gain would be included as assessable income? (CGT)
If land was held in a revenue account it would be included in assessable income on settlement of the contract.
If land was held as capital it would be included in assessable income when the contract was entered into
What is the date for Pre-CGT assets?
If an asset was acquired before 20 September 1985 it is generally disregarded
Remember there are rules about acquisitions, there may be discounts and provisions. If a CGT event happens for a seller does it arise for the buyer?
No, they could be purchasing as to resell for revenue etc. there are lots of examples and covered under s. 109-5/10
What are three general exempt assets from CGT?
Cars and motorcycles
Collectables $500 or less
Personal use asset $10,000 or less
Some items are exempt from CGT, what are three of them?
Cars and motorbikes
Personal under $10k
Collectable under $500
When applying a previous years CGT loss to your assessable income it must be in an order. What method is used?
FIFO (first in first out)
Are concessions available to CGT?
Yes to individuals 50%
and some concessions available to SBE
Can taxpayers apply the discount capital gain option and the indexed cost base?
No, the discount is usually a better option out of the two
What assets does CGT apply on Australian property for foreign residents?
•• A direct interest in Australian real property.
•• A CGT asset used at any time in carrying on a business through a permanent establishment
in Australia.
•• An indirect Australian real property interest (i.e. an interest in an entity, including
interposed foreign entities, where the foreign resident and associates hold 10% or more of
the entity and the value of the underlying interest is principally attributable to Australian
real property).
