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Capital Gains Tax

Discussion in 'Investing Glossary' started by Sim, 26th Sep, 2006.

  1. Sim

    Sim Guest

    Definition:

    Strictly speaking there is no such thing as Capital Gains Tax or CGT! Rather, under income tax law what happens is that if a trigger, referred to in the legislation as CGT Events, occurs then any Capital Gain resulting from that CGT Event is added to the taxpayer's taxable income. The taxpayer then pays tax on that extra amount at their marginal tax rate just as if the gain was income from their salary etc.

    It would be an understatement to say the CGT rules are complex! However, there are a couple of key CGT provisions which investors should be aware of:
    • the Main Residence exemption (also known as Principal Place of Residence exemption)
    • the general 50% discount for assets held for more than 12 months before the disposal or other CGT Event
    • the 1/3 discount for Super Funds
    • there are also a series of CGT discounts and exemptions for small business.
    Also known as:
    • CGT
    See also:
     
    Last edited by a moderator: 30th Oct, 2006