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Capital gains tax (CGT) applies in Australia when you sell shares, an investment property or other asset at a profit. CGT doesn't apply to most personal property and items, such as your car or family home.
You can use Finder's simple capital gains tax calculator to estimate your capital gain (or loss). This will help you understand your CGT obligations, but please keep in mind it's just an estimate.
Use the calculator below to estimate your CGT for yourself.
Disclaimer: The information provided by this calculator is only intended to provide an approximate estimate of the CGT you may need to pay. It is general in nature and does not constitute professional advice. The rules relating to CGT are complex and you should always seek professional advice in relation to your particular circumstances.
First you need to state whether you've owned the asset for more than 12 months (a yes or no question). If you've owned the asset for more than 12 months a 50% capital gains tax discount applies.
Then you enter the purchase price (the price you paid for the asset) and then the price you sold it for.
Last, enter your taxable income for the current year. That's your income before tax.
Here's a simple example:
That's just a simple estimate. You can click "How this calculator works" for more information about the assumptions built into the capital gains tax calculator.
Capital gains tax is not actually a separate tax charged on top of your income tax. Instead, the capital gain is added to your taxable income. This is why the calculator asks for your taxable income.
This means a large capital gain can push you into a higher tax bracket.
In the example above, if you just earned $85,000 a year before tax your marginal tax rate is 32.5%. But when you add the $100,000 of taxable capital gains from the asset sale this puts you at $185,000. And that puts you in Australia's highest marginal tax bracket with a rate of 45%.
Luckily, if the asset you're selling is an investment property you can reduce your capital gains tax further by subtracting certain costs. More on that below.
When selling an investment property you are able to deduct the costs of owning and maintaining the property from the sale price. This is called your cost base.
Here's a simple example:
Learn more about CGT when selling property
If you've already claimed tax deductions for expenses related to maintaining and owning your property, you can't deduct these again from your capital gains tax. This is why keeping clear tax records for every year you've owned an asset is so important. These previous deductions need to be subtracted from your cost base.
It's also possible to make a capital loss. This is where you sell the asset for less than you paid for it, after your costs to maintain the asset are taken into consideration. With a capital loss you obviously don't have to pay any capital gains tax because there is no profit.
There is an upside though. You can use a capital loss to offset future capital gains. Let's say you sold an asset for $20,000 less than the cost base three years ago. Then this year you sold another asset for a capital gain of $50,000. You can subtract the $20,000 loss from the gain and reduce your capital gain to $30,000.
There is no time limit on when you can use a capital loss to offset a gain. But you need to have detailed records to show you have made a capital loss in order to claim it.
When a super fund sells an investment asset and makes a capital gain it is liable for capital gains tax. But this doesn't directly affect an ordinary person with a super fund. The fund itself takes care of this.
Self-managed super funds (SMSFs) also have to pay CGT. As with property, if you own an asset through an SMSF for more than 12 months there is a discount. With super the discount is a 33.3% rather 50%.
Capital gains tax also comes into effect when you sell shares. It works the same as with property. There's a 50% discount if you owned the shares for more than 12 months before disposing of them. If you make a capital loss you can use it to reduce future capital gains.
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