Summary - lecture CGT PDF

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Download Summary - lecture CGT PDF

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Before consider if it’s a business or Deductable

Capital Gain Tax STEP 1

Has the TP made a capital gain or loss? 1. Is there a CGT Event? A1 Disposal of a CGT asset: s104-10 C1 & C2 End of a CGT asset: ss 104-20; 104-25 D1 Creating contractual or other rights: s 104-35 I1 Stop being an Australian resident:s 104-160

Houses/ Shares C1 House Burn & C2 Option Cancel Restrictive Covenant Create Taxing time

2. Is there a CGT Asset? section 108-5(1) Any kind of property; or Legal or equitable right that is not property 3. Do any exceptions, special rules or exemptions apply? Pre-CGT assets- acquired pre 20 September 1985 CGT Event I1: AUS residents subject to tax on all CGT assets that are not TAP when Collectables Cost < $500 See Tax loss Issues stop being a resident Personal use assets Cost < $10,000 General exemptions (Subdivision 118-A) Car Motorcycle Depreciating Assets Specific exemptions- Main residence (Subdivision 118-B) Exempt Gambling & Competition Compensation Payment 4. Can there be a roll-over? Replacement asset roll-over: listed in s 112-115 Subdivision 124-B: assets compulsorily acquired, lost or destroyed Same asset roll-over: listed in s 112-150 Subdivision 126-A: marriage breakdowns STEP 2 Calculate the gain or loss from the transaction Capital Proceeds > Cost Base = Capital Gain Capital Proceed is less the incidental costs If Capital Proceeds < Cost Base = Capital Loss Cost base is plus the incidental costs Amount of capital loss = Reduced Cost Base –Capital Proceeds If CB > CP > RCB →no capital gain or loss INDEXED COST BASE STEP 3 Calculate the net capital gain/loss for the year 1. Calculate each gain/loss separately on all CGT events occurring during an income year 2. Deduct any losses from the gains (in any order the taxpayer chooses) 3. Deduct any losses carried forward from earlier income years 4. Reduce any remaining discount capital gains by the appropriate percentage (50% or 33⅓%) 5. Add up the remaining gains 6. The sum is the net CG for the income year to be included in assessable income under s 102-5...