Capital Gain Tax (CGT)

Capital gain or capital loss is the difference between the Selling price of the asset and the cost price with improvements of the same asset.

If a capital gain has been made and the asset has been held/owned for more than twelve months the gain is halved before applying tax.

Income tax law allows for the following exemptions from capital gains tax

If the asset purchased before 20 September 1985,

Main residence or principle place of residence is exempt asset for CGT,

Car, Motorcycles and Valour Decorations,

Personal use assets purchased for less than $20,000 ( ie Boat),

Collectables to the value of $500 or less,

For all other assets capital gains tax will apply including assets held overseas.

In calculating the capital gain the following expenditure may be deductable against the capital gain.

Selling cost,

Agent’s fees and advertising,


Holding cost of the asset (i.e. rates and tax on vacant land)

Stamp duty on the original purchase price

Legal fees incurred in the selling of the asset,

Capital Gains Loss rolled forward in your tax return from previous years.

The rate of tax is the marginal rate of tax for an individual or company in the year of sale. If a taxpayer leaves the country to live abroad and continues to hold assets in Australia the capital gain is deemed to have happened at the date of departure from Australia. There is an election available to the taxpayer as to when this tax applies.