We’ve compiled everything you need to know on the complex topic of capital gains tax (CGT) in one easy-to-find place.
Capital Gains Tax is perhaps one of the most wide-ranging and complicated taxes in the Australian tax system. It has diverse applications in a range of scenarios, including:
- selling your main residence
- divorce and separation
- inherited properties
- foreign residents
Below, you can find a summary and links to a selection of our previous CGT articles that cover the above topics. You’ll find the core points to help you to gain an understanding of each.
Capital Gains Tax is complex!
When looking to solve a CGT query, or calculate a potential CGT liability, exemption or concession, you’ll soon see that it is usually not a straightforward process. Inevitably, the details, and therefore the application of CGT, in each individual situation can vary significantly. There are exemptions, and partial exemptions, as well as a diverse range of conditions to be met, and various applicable dates to be considered (and that is a VERY brief overview!).
CGT and the Principal (or Main) Residence Exemption
There is a lot to cover when it comes to CGT and Principal (Main) Residence (also referred to as PPOR).
When you sell real estate for more than you bought it for, you make a capital gain. Ordinarily, capital gains form part of your income tax, essentially increasing the tax that you are required to pay. However, there are certain types of assets that are exempt from capital gains tax (CGT). For example, you do not have to pay CGT on any capital gain you receive from disposing of a dwelling that is your main residence. But what’s a “dwelling”? And how do you prove that such dwelling is your main residence?
Read CGT and the Principal Residence Exemption where we help to unpack the basics of what constitutes a dwelling, and the requirements for the dwelling to be considered a PPOR.
Understanding Main Residence CGT Exemptions explains the key components of the 6 month rule and the 6 year rule which both provide CGT exemptions that may be applicable to your PPOR.
CGT Implications when dealing with Divorce or Separation
In general, the transfer of property triggers a Capital Gains Tax (CGT) event, but that does not necessarily mean that CGT is payable.
There are further specific conditions and criteria that may apply when it comes to property that is transferred during the process of relationship separation and divorce.
In Capital Gains Tax: Divorce & Separation we discuss how property might be handled, and possible CGT implications in the event of divorce or separation, as well as the criteria and application of the CGT Marriage or Relationship Breakdown Rollover.
Do I Pay Capital Gains Tax on Inherited Property?
If you inherit a dwelling, there are usually no capital gains tax implications at the time you inherit it. However, it is important to know that capital gains tax may apply when you subsequently sell, or otherwise dispose of, the dwelling.
Read Do I Pay Capital Gains Tax on Inherited Property? where we take you through the key things to understand when it comes to capital gains tax on inherited property.
Understanding CGT for Foreign Residents
Capital gains tax becomes even more complex when considering residency status.
It is important to understand the implications and application of capital gains tax (CGT) in relation to tax residency status, as well as how any changes to your tax residency may affect CGT liability and eligibility for any exemptions or concessions.
Our article Understanding Capital Gains Tax (CGT) for Foreign Residents highlights the main points to be aware of when it comes to CGT and tax residency and looks particularly at CGT considerations for foreign residents in Australia.
Get Expert CGT Advice at The Quinn Group
In order to ensure that you are correctly assessing how CGT applies to your individual situation it is strongly recommended to seek the help and advice of knowledgable CGT experts, such as the team of tax accountants at The Quinn Group. With extensive experience when it comes to advising on a range of diverse and complex capital gains tax matters, you can be confident that we will work hard to ensure that your capital gains tax matter is carried out in compliance with the requirements, while also seeking to legally minimising your liabilities wherever possible.
Of course, no one wants to pay more tax than they have to. Getting incorrect advice or not correctly reporting your CGT obligations can be even more stressful and costly in the long run. So it definitely pays to do it right from the outset.
Whether you are seeking advice before you make a transaction or disposing of a property, or you have disposed of the asset and need help to correctly assess and report the CGT liability, or any other CGT related matter you might have, we can help. Contact us on (02) 9223 9166 or complete an online enquiry to schedule an appointment.