Tips to Reduce your CGT Liability
All assets you’ve acquired since tax on capital gains started (on 20 September 1985) are subject to CGT unless specifically excluded. When you sell or otherwise dispose of an asset it’s called a CGT event. This is the point at which you make a capital gain or capital loss.
It’s important to establish the timing of a CGT event because it tells you in which income year to report your capital gain or capital loss, and may affect how you calculate your tax liability.
A capital gain or capital loss on an asset is the difference between what it cost you and what you receive when you dispose of it. You pay tax on your capital gains. It forms part of your income tax and is not considered a separate tax – though it’s referred to as capital gains tax.
You must keep records of every transaction, event or circumstance that may be relevant to working out whether you’ve made a capital gain or capital loss from a CGT event. Penalties can apply if you don’t keep the records for at least five years after the event.
Keeping adequate records will help you work out your capital gain or capital loss correctly when a CGT event happens.
Did you know there are a number of different ways to legally reduce your capital gains tax liability? There are three options for working out your capital gain. You can choose the method that gives you the best result (that is, the smallest capital gain).
Did you also know that if you have a holiday home or a unit that is not rented out and was purchased after 19 September 1985, it is still subject to capital gains tax? The ATO are using their data matching system to initiate capital gains tax reviews.
Our team of tax accountants and tax lawyers are able to advise you on a range of Capital Gains Tax issues, from simple CGT calculations to detailed advice on how to legally minimise your capital gains tax obligations.
Why not ensure you minimise your CGT liability by contacting The Quinn Group on (02) 9223 9166 or submit an online enquiry.
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