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AU Tax 2024

Understanding Capital Gains Tax (CGT) in Australia: Individuals vs Corporations

Capital Gains Tax (CGT) is a tax on the profit made from the sale of certain assets. In Australia, CGT is a significant part of the tax landscape for both individuals and corporations, though there are key differences in how it is applied to these entities.

Capital Gains Tax for Individuals

For individuals, CGT is typically applied to the sale of assets like property, shares, or investments not associated with a business. The gain is calculated as the difference between the sale price and the original purchase price, after accounting for associated costs like acquisition and disposal expenses.

  • CGT Discount: Individuals are eligible for a CGT discount if they have held the asset for more than 12 months. This discount reduces the taxable gain.
  • Exemptions and Concessions: Certain assets, such as a primary residence, may be exempt from CGT under specific conditions. There are also concessions for assets used in a business and for small business owners.

Capital Gains Tax for Corporations

Corporations are subject to CGT on the sale of assets, including shares, property, and intellectual property. The gain is added to the company's assessable income and taxed at the corporate tax rate.

  • No CGT Discount: Unlike individuals, corporations are not eligible for the CGT discount, regardless of how long they have held the asset.
  • Asset Rollover Relief: Corporations may be eligible for rollover relief in certain situations, such as asset restructuring, which can defer the CGT liability.

Calculating and Reporting CGT

Both individuals and corporations must calculate their capital gains or losses for each tax year and report them in their tax returns. The net capital gain is included in taxable income for the year.

Note: Specific rates and thresholds for CGT are detailed in separate tax tables. As tax laws are complex and subject to change, it is advisable to consult with a tax professional for advice tailored to individual circumstances or corporate strategies.