Capital Gains Tax

Capital Gains Tax (CGT) is the tax to pay on any net capital gain you make and include on your annual income tax return. CGT is not a separate tax, but a component of your income tax. You are taxed on net capital gains at your marginal tax rate.

The Capital Gain or Capital Loss worksheet helps you calculate a capital gain or loss for each CGT event. Each CGT asset that resulted in a CGT event needs to be organised under one of these categories:

• Real estate
• Other CGT assets (including personal use assets) and any other CGT events
• Collectibles

If a capital gain is made, it can be calculated using one of these methods:

• Indexation method for capital gains made on CGT assets acquired before 21 September 1999 and owned for at least 12 months
• Discount method for assets owned for at least 12 months and for which you are not using the indexation method
• 'Other' method (if neither indexation method nor discount method applies)

These three methods of calculating a capital gain are explained in the Guide to Capital Gains Tax on the ATO website.

A capital gain is transferred to the CGT summary worksheet according to the method you used to calculate it and the type of asset that gave rise to it. This worksheet is used to calculate your entity's net capital gain or net capital loss for the income year.

There are four CGT small business concessions that may apply to capital gains from active assets. These concessions are explained in the Guide to Capital Gains Tax Concessions for small business.

If the total capital gains or capital losses of your entity exceed $10,000 for the current year, a CGT schedule must be completed. The Guide to Capital Gains Tax explains how to complete the CGT schedule. For additional information about CGT, see the CGT section of this guide on the ATO website.