Making capital gains and capital losses
Capital gains tax (CGT) is the tax you pay on your net capital gain. It isn’t a separate tax, just part of your income tax.
If you make a capital loss when you dispose of an asset, you can use it to reduce any capital gain you made in the same financial year. If you have not made a capital gain in the same financial year, you can use the loss to reduce a capital gain in a later year. You cannot deduct capital losses or a net capital loss from other income.
General Exemptions for Capital Gains Tax (CGT)
ExemptionsA capital gain or capital loss you make from any of the following is disregarded:
Other Exemptions You may reduce your capital gain if, because of a CGT event, you have included an amount in your assessable income other than as a capital gain. For example, if you make a profit on the sale of land that is included in your assessable income as ordinary income, you don’t also include that profit as a capital gain. Several concessions allow you to disregard part or all of a capital gain made from an active asset you use in your small business. CGT Asset Many capital gains tax (CGT) assets are easily recognisable – for example, land, shares in a company and units in a unit trust. Other CGT assets are not so well understood – for example, contractual rights, options, foreign currency and goodwill. CGT assets fall into three categories: collectibles, personal use assets and other assets. Disposal of a CGT Asset You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership doesn’t occur:
Time of the event:
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