Capital Tax Advice in Greensborough
Probably one of the most complex topics in personal finance, is Capital Gains Tax. Capital gains tax is a tax that is levied on the sale, exchange, or disposal of assets such as investments, property, and businesses. In Australia, capital gains tax rates vary depending on your income level and the type of asset you have sold. For example, the top marginal capital gains tax rate for individuals who have an income above $180,000 is 30% (as of 1 January 2019).
In Australia, Capital Gains Tax (CGT) is a tax on the increase in the value of assets such as shares, property and intellectual property. This tax is payable when the asset is sold and can add up to a significant proportion of the value of your sale.
In short, capital gains tax is a tax on the profit from the sale of an asset. This could be a piece of property, a stock, or some other type of investment. The tax is levied on the difference between the selling price and the original purchase price.
If you’ve ever sold something for more than you paid for it, then you may have had to pay capital gains tax. It’s important to understand how this tax works so that you can properly plan for it.
In Australia, capital gains tax applies to the receipt of any asset, including cash and investments, that has been sold. The tax is calculated as a percentage of the sale price, and it depends on whether the individual is a resident or a non-resident.
The tax is generally charged at 15%, but this can vary depending on your income level and other factors. If you are a resident of Australia, you are generally required to include the capital gains in your taxable income. However, if you are a nonresident and hold an investment for less than 12 months, you are not subject to Australian taxation on the gain.
If you are a resident of Australia and sell an asset for more than A$250,000 (or its equivalent in another currency), you are required to pay an additional 15% capital gains tax on the excess over A$250,000. This means that if you sell an asset for A$260,000, you will owe 20% tax on the excess over A$250,000 ($10,000).
The tax rate on a capital gain depends on how long you held the asset before selling it. For assets held for more than a year, the capital gains tax rate is generally lower than your regular income tax rate.
Short-term capital gains (assets held for less than a year) are taxed at your regular income tax rate. So if you’re in the 25% tax bracket, your short-term capital gains will be taxed at 25%.
Long-term capital gains (assets held for more than a year) are taxed at a lower rate. For example, in 2018, the long-term capital gains tax rates were 0%, 15%, or 20% for most taxpayers. That means if you’re in the 25% tax bracket, your long-term capital gains would be taxed at 15%.
For an individual, the tax brackets for Australian residents’ 2022-2023 financial year were:
Capital Gains Tax is payable when you sell an asset for more than you paid for it. The amount of tax you pay will depend on how much profit you make and your personal tax situation. If you’re in a higher tax bracket, you’ll pay more Capital Gains Tax than someone in a lower tax bracket.
A few common exceptions to Capital Gains Tax (CGT) may include:
Capital Gains Tax (CGT) is a tax on the profit realized from the sale of certain assets, including shares, property and personal possessions. The main purpose of CGT is to prevent people from making a profit by selling assets that have increased in value since they were purchased. When an asset is sold for more than its purchase price, the difference between the two amounts is considered a capital gain.
Melican Partners Financial Planning are equipped to help you navigate your obligations and solve your Capital Gains Tax (CGT) concerns. We are professional tax specialists and can help you to make the most of your assets and reduce the amount of CGT that you need to pay.
Contact our team for honest and straightforward advice from experienced accountants.