In today’s article, we examine capital gains tax assets.
What Assets are Subject to CGT?
All assets you have acquired since Capital Gains Tax (CGT) started (on 20 September 1985) are subject to CGT unless specifically excluded.
For example, CGT applies to:
- real estate
- shares, units and similar investments
- leases, goodwill, licences, foreign currency, contractual rights, and major capital improvements made to land or pre-CGT assets
- collectables and personal use assets above a certain value (there are restrictions on using any capital losses from these items).
Some assets are exempt from CGT, such as:
- your main residence (there are some exceptions)
- a car or motorcycle
- depreciating assets used solely for taxable purposes, such as business equipment or fittings in a rental property
- any asset acquired before 20 September 1985.
Is my home subject to CGT?
Most real estate is subject to capital gains tax (CGT). This includes vacant land, business premises, rental properties, holiday houses and hobby farms.
Your main residence (your home) is generally exempt from CGT unless you have used it to earn rent or run a business, or it’s on more than two hectares of land.
It is important to:
- keep records of your real estate, including your own home (in case in the future you start renting it out or running a home business)
- remember that when you sell real estate, the time of the event (the time at which you make a capital gain or loss) is when you enter into the contract, not when you settle.
Are Shares Subject to CGT?
Shares in a company or units in a unit trust (including a managed fund) are treated in the same way as any other asset for capital gains (CGT) tax purposes.
For an investor, CGT applies to capital gains on shares or units when a CGT event happens, such as when you sell them (unless you acquired them before CGT started on 20 September 1985). However, profits on the sale of shares made as part of a business of share trading are taxed as ordinary income rather than as capital gains.
If you need more assistance in relation to Capital Gains Tax or would like to know more, come back next week for our next article on CGT or feel free to contact Quinns via the information below.
If you require further assistance with respect to the above or would like to know more about taxation, you are welcome to contact our team of experienced tax accountants and lawyers by clicking here to submit an online enquiry form or call us on 1300 QUINNS (1300 784 667) or on +61 2 9223 9166 to arrange conference or appointment.