Capital gains tax is the tax paid on the gain of the sale of a capital asset. Capital assets such as real estate or shares, when sold, need to be declared in your tax return. The gain or loss is determined by the selling price of the asset less the purchase price. If there is a profit made on the sale of the asset, you are required to pay tax on the difference.
If you make a capital gain, the gain is added to your assessable income and therefore may increase the amount of tax you will need to pay in your tax return. When selling capital assets, it is recommended you seek advice from your tax agent or by using online calculators to assess how much of the gain you should put aside to allow for the tax payable in your tax return.
If you make a capital loss, the loss cannot be used to minimise your taxable income, but can be used against another capital gain. If there are no other capital gains in the current financial year, the loss can be utilised against future capital gains.
There are also concessions and discounts on some capital gains depending on the time frame you held that asset for. It is recommended you have a trained tax professional assist you with this to ensure you are not paying more than you need to in tax. Call Taxwise on (08) 9248 8124 to discuss how we can help you today!