Under the Income Tax Assessment Act 1997, a taxpayer's total capital gain consists of both net capital gain subtracted from their net capital losses for the financial year (July 1st to June 30th). Variations on income tax liability depend on whether the taxpayer has made either a capital gain or a capital loss.1 Capital gains occur whenever costs are less than the gains on a capital asset. Conversely, capital losses arise whenever costs exceed a gain. 2
The most common event for taxpayers involves the disposal of capital gains assets, otherwise referred to as CGT Event A1. Disposals manifest from changes to ownership of a business or residential property; timing of disposal ultimately affects the outcome on whether a taxpayer incurs any capital gains or losses. Where the capital proceeds are greater than the cost base of the asset, the taxpayer incurs a capital gain. The inverse holds true; capital losses occur whenever capital proceeds are less than the cost base of the asset. Any capital gains or losses incurred prior September 20th 1985 are excluded from assessment. 3
In regard to residential property, Cindy acquired property in 2012. As of August 2016, the property has a market value of $1.5 million of which …show more content…
This is applicable irrespective whether the small business is wholly owned by the individual taxpayer or as an entity with business interests. 8 To find the net value of the capital gains assets, simply subtract assets from the liabilities. 9 Exclude any interest or shares owned in listed companies affiliated with small business entities. Where assets are held in the name of an individual, exclude the following: assets used for personal enjoyment, (either individually or with an affiliate), the current market value of any free standing property, (including interest in investment property), life insurance premiums and superannuation payments.
The most common event for taxpayers involves the disposal of capital gains assets, otherwise referred to as CGT Event A1. Disposals manifest from changes to ownership of a business or residential property; timing of disposal ultimately affects the outcome on whether a taxpayer incurs any capital gains or losses. Where the capital proceeds are greater than the cost base of the asset, the taxpayer incurs a capital gain. The inverse holds true; capital losses occur whenever capital proceeds are less than the cost base of the asset. Any capital gains or losses incurred prior September 20th 1985 are excluded from assessment. 3
In regard to residential property, Cindy acquired property in 2012. As of August 2016, the property has a market value of $1.5 million of which …show more content…
This is applicable irrespective whether the small business is wholly owned by the individual taxpayer or as an entity with business interests. 8 To find the net value of the capital gains assets, simply subtract assets from the liabilities. 9 Exclude any interest or shares owned in listed companies affiliated with small business entities. Where assets are held in the name of an individual, exclude the following: assets used for personal enjoyment, (either individually or with an affiliate), the current market value of any free standing property, (including interest in investment property), life insurance premiums and superannuation payments.