Capital gains tax rate Australia

Please note this is general advice only and cannot be acted on without seeking professional advice.

Capital Gains Tax in Australia isn’t a separate tax like some think it is. It’s actually part of the general taxation system, just with some extra concessions available.

Capital gains tax will only become an issue if you sell assets. If you inherit them and don’t sell them, no tax applies (see below). 

Different calculations are needed for different structures such as Individuals, Companies, Trusts and Superannuation Funds.

Different rules can also apply if you’re a resident or non -resident of Australia for tax.

In this blog, we’ll deal with Australian tax residents only.

Capital gains tax Australia rental property

Assets which fall under the Capital Gains rules in Australia include:

  • rental properties,
  • Holiday homes,
  • land not part of your residence,
  • shares or
  • goodwill in a business Calculate Capital Gains Tax on property

If you’re an individual and buy a capital asset and sell it within one year, 100% of any gain you may make is simply added to your income for that year and you’re taxed on it. 

If you’re an individual and buy a capital asset and hold it for at least one year then make a gain on it, 50% of the gain is tax free and the other 50% is included with your income for that year.

Unfortunately, if you sell capital assets at a loss, you can’t claim the loss against your salary, business or investment income. You have-to wait to make a capital gain before you can take advantage of the loss.

Capital gains tax when selling a business

Tax when selling a business can attract even more concessions meaning there could be much less or no tax to pay at all.

Provided certain conditions are met, some or all of the tax when selling a business may be:

  1. Discounted by up to 75%
  2. Rolled over into superannuation tax free;
  3. Rolled over into another business venture or
  4. Be free of tax altogether.

Capital gains tax Australia inherited property

Capital gains tax on inherited property also contains certain rules.

Generally:

  • if you’re selling an inherited residence, you have two years to sell if from the persons date of death before any tax needs to be considered.
  • If you inherit shares, the shares may need to be revalued if they were acquired before the capital gains tax began (20 September 1985).
  • If you’ve inherited a rental property, similar rules apply as with shares.

Capital gains tax exemption Australia

Your home or “Principal Place of Residence” will always be exempt from Capital Gains Tax.  It should be noted though that your residence may not include the whole property on which it sits. Only 2 hectares can be covered by this exemption.

The tax office does provide a capital gains tax calculator Australia but because the rules are complicated you will most likely need professionals with the right expertise to get the right advise. NBC are experts in this area.