Capital Gains Tax (CGT)
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✔ Property, shares, and business asset CGT advice.
✔ Individuals, companies, SMSFs, trusts, and partnerships.
✔ Maximise discounts and exemptions.
✔ Friendly, jargon-free advice.
Understanding Capital Gains Tax in Australia
You’ve bought, inherited, or been gifted an asset, and the day comes when you want to sell. With the profit, you’re planning on reinvesting, pursuing a new venture, or treating yourself after years of patient holding. But, as soon as you get your reward, the ATO appears and wants its own generous slice with Capital Gains Tax (CGT).
This liability can dramatically affect how much cash you eventually get in your pocket … particularly if you’re unaware of the many complex regulations, exemptions, and strategies that can often work in your interests.
Whether you’re selling property, shares, crypto, or a business … advice from CGT experts DSV Partners is crucial. We clearly explain your obligations, identify legal routes to reduce your taxable gains, and assist you in your next personal or business financial ambitions.
What Is Capital Gains Tax?
If you make a profit when you sell your assets, you enjoy what is called a capital gain.
In most circumstances, this gain is the difference between the price you originally paid for the asset (the cost base), and the return you receive when you sell it (the capital proceeds). Most commonly, this applies to property, shares, and businesses. And, this capital gain is usually taxed.
However, unlike many other countries (such as the UK) … which apply a specific CGT tax and rate to these gains … in Australia, it’s instead simply included in your assessable income for the year. So, typically, individuals are charged at the marginal tax rate, and companies at the company tax rate.
CGT Events … It’s Not Just About Selling
Although selling an asset is perhaps the most common CGT event, Capital Gains Tax can also be triggered by a number of other circumstances, even if no cash changes hands.
CGT triggering events:
Change of Property Use
If your main residence (CGT-exempt) is then used to create income, e.g. you let it out, this can cause a partial CGT liability.
Creating a Trust
And then subsequently moving assets into the trust.
Assets Are Lost
If you get an insurance payment for a lost or damaged asset, this could be a CGT event.
Obtaining Assets From a Will
Although there’s no CGT when you receive the inheritance, you may be liable to CGT if you later sell it.
Granting an Option
Giving a person the option to buy an asset from you can be a CGT event.
Gifting Assets
When you give an asset to someone else for free, the ATO treats it the same as if you sold it to them at its true market value.
Changing Business Structure
E.g. transferring assets from one business structure to another type, such as from a sole trader to a company.
Redeemed/Cancelled Shares
Should a company cancel or buy back your shares, any gains can be subject to CGT.
What Assets Can Be Subject To Capital Gains Tax?
Under Australian CGT rules, assets aren’t all treated the same.
So, before you go ahead and dispose of an asset, it’s extremely valuable to understand how it’s going to be treated for CGT. While speaking to DSV Partners for specific advice is advisable, here are the basic rules:
Commonly Taxable CGT Assets
Investment properties – residential, commercial, buildings held for investment or income reasons.
Assets abroad – property, shares, or businesses owned overseas by Australians.
Cryptocurrency – digital assets such as Bitcoin, Ethereum, or Dogecoin.
Shares – listed shares and mutual fund units.
Businesses – including goodwill, licences, or Intellectual Property (IP).
Collectables – art, jewellery, antiques, and stamp collections (all over a certain value).
Personal assets over $10k – such as boats or vehicles which cost $10k or more to acquire.
Trust/partnership interests – if gains are made when these interests are disposed of.
Commonly Exempt CGT Assets
Assets acquired pre 20 September 1985 – exempt, including those listed above as usually being taxable.
Your home – most residences are exempt, unless they are also used to create income.
Business assets that are depreciated – like tools, machinery, and equipment.
Cars and motorbikes – that are solely for personal use.
Personal assets under $10k – furniture, vehicles, and belongings that cost less than $10k to buy.
Winnings – competition prizes and lotteries aren’t subject to CGT.
Some compensation payments – such as for personal injuries or workers’ compensation.
Who Pays Capital Gains Tax?
In short, anyone who owns an asset that heightens in its value over time … and then disposes/sells it … could be liable for Capital Gains Tax. This includes:
- Individuals – everyday taxpayers who sell their properties, shares, or other personal investments.
- Companies – when businesses sell their commercial buildings or investments
- Trusts – both family trusts and unit trusts that hold assets on behalf of their beneficiaries.
- Self-Managed Super Funds (SMSFs) – if the Super sells its assets outside of the pension phase.
- Partnerships – each partner must declare their share of any capital gains on their individual tax return.
But, while CGT is a coverall across entities … their rules, deductions, exemptions, and rates vary widely across each structure type. This complexity, the requirement to get it right the first time, the implications of mistakes, and the risk of missing out on exemptions mean speaking to a professional is crucial.
DSV Partners will ensure your CGT duties, declarations, and payments are accurately calculated and lodged … irrespective of your asset, entity, or structure. We make sure you’re always compliant, and strive to pursue every possible available CGT concession.
Capital Gains Tax Exemptions on Property
Although the majority of property sales in Australia are liable for CGT (if a gain is made), there are three very important exemptions. Depending on your circumstances and CGT strategy, they could reduce … or remove altogether … your capital gain liability.
Bear in mind these are all generalisations. DSV Partners will provide you with tailored advice focusing on your needs, property position, and tax situation.
Exemption for Main Residences
You live happily in your home with your family. For many people, it’s not only their pride and joy, but also their most valuable asset. Therefore, it’s reassuring to know that if you sell your residence, in most situations, it’s CGT exempt.
Generally speaking, you won’t pay CGT if:
- For the entire time you owned the building, it was your principal place of residence.
- It wasn’t used to create income or for business.
- The property is where you keep your belongings.
- Your post and utility agreements are attached to the building.
Bear in mind you can only have a single principal place of residence at any particular time … unless under certain conditions, such as a relatively short period when you’re moving house.
Six-Year Property Absence Rule
This is a remarkably useful addendum to the main residence exemption. Basically, it means that you’re allowed to class a property as your principal residence, even if it’s been up to six years since you left it and started letting it out.
However, there are restrictions:
- The property must have been your main residence before you moved.
- During the period (up to six years), you didn’t treat another property as your principal residence.
- Before you left the property, you didn’t use it to create income.
This exemption is really useful, particularly if you have no option but to move for personal or work reasons … but still want to keep the building as an investment. And, if you move back in, the six-year period could be reset to zero.
Small Business Property Concessions for CGT
Should you sell a CGT asset that you use in your small business, it’s possible that you may be eligible for concessions. These welcome benefits can eliminate or reduce your capital gains. To be accepted for this, you need to meet conditions surrounding your asset threshold, use, and turnover.
There are four main small business concessions:
- 15-year exemption – when you’ve owned the asset for 15 years and are permanently incapacitated or retiring.
- 50% active asset reduction – cutting the CGT in half, as long as it’s for an asset used in running your operation.
- Retirement exemption – you may get up to $500k in capital gains concessions if you’re retiring.
- Rollover exemption – deferring payment of CGT if you sell a small business asset and use the cash to acquire another business asset.
That said, these concessions aren’t allowable on investment properties or residential rentals. They can apply to commercial buildings used in a business, or mixed-use.
Inherited Property
It’s comforting to receive a property as the beneficiary of a loved one’s Will. When you inherit the property, there’s no Capital Gains Tax due. But, if you sell it, you could be liable for CGT. The amount of capital gain depends on numerous factors … including whether the property was originally purchased before or after 1985.
However, there may not be a CGT event, if:
- The property was the deceased’s principal residence, and
- You sell it inside two years of the date of their passing, and
- You didn’t generate income from the property during that period.
Additionally, exemptions can also be allowable if you gain the building as a beneficiary, and you subsequently move into the home and make it your own main residence.
What Happens If You Don’t Report Capital Gains?
Should you fail to declare your capital gains to the ATO, you’re starting a chain of events that can have severe impacts and repercussions on you, your family, your home, and your business.
The ATO are remarkably resourceful, inquisitive, and unrelenting. Able to access information from land registries, banks, crypto exchanges, and share registries … the chances of you getting away with hiding gains are slim to non-existent.
Instead, speak to DSV Partners. Our friendly team of experienced CGT experts will explore all possible (and legal) CGT deductions and exemptions … saving you money while staying on the right side of the tax office.
The Possible Consequences of Not Reporting Capital Gains:
Penalties and Interest Charges
The ATO isn’t shy of hitting individuals and businesses with fines … if they make false statements or under-declare. What’s more, for good measure, they then apply a General Interest Charge (GIC) on unpaid tax, which compounds every day … meaning you’ll pay more than you would if you declared properly in the first place.
Causing Audits and Investigations
Failure to report your capital gains rings alarm bells with the tax office. If they find contrary information from third-party sources and your tax return, this can mean a full-on audit. Not only is this disruptive, costly, and extremely time-consuming, but it can then cause them to look into every aspect of your finances and taxes.
Losing Tax Benefits
Reporting capital losses is equally as important as declaring your capital gains. If you don’t tell the ATO what the loss was in a particular year, you can’t then utilise that deficit to offset gains in the future. In short, you’re causing yourself to pay more tax later.
Reputational and Operational Risks
Trying to hide things from the ATO, or not reporting due to ignorance or error, can mean getting investment, bank financing, and mortgages is challenging. Furthermore, if customers find out about investigations and audits, it can severely harm your business reputation.
Capital Gains Tax Is Complex … Here’s Why You Need Help
The rules, regulations, and exemptions involved in CGT are remarkably complicated. Getting it wrong can mean serious implications, and doing it yourself requires extensive capital gains knowledge.
DSV Partners delivers the expertise you need to deal with:
Convoluted cost bases – we figure out the correct cost base with purchase prices, acquisition costs, stamp duty, legal fees, capital improvements, and time of purchase.
Discounts and exemptions – with CGT discounts up to 50 percent, and 100 percent exemptions.
Record-keeping – this is your responsibility, giving DSV the ability to calculate and justify the cost base and apply allowable deductions.
Strategic timing – we can advise on the ideal date on which to dispose of your assets, which can impact your tax position for a specific financial year.
ATO scrutiny – we get it right the first time, ensuring that there are no errors or omissions that could start an audit or investigation.
Accurate CGT calculations – precisely calculating the capital gain or loss and how it impacts your overall tax position.
ATO reporting – preparing and lodging all the necessary documentation with your annual return, detailing CGT events.
Ongoing capital gains advisory service – delivering long-term guidance to ensure your future decisions are informed.
Why Choose DSV Partners for Your CGT?
At DSV Partners, we’re not just here to calculate how much CGT you must give to the ATO … we’re also here to ensure you keep more of what your hard work has earned.
Working closely with you, our friendly and knowledgeable team strives to identify all allowable exemptions and deductions, give you powerful capital gains tax planning strategies, and work in a way that brings long-term financial success for the many years to come.
With DSV Partners, you gain the benefits of:
Sydney’s CGT experts – our accounting team has extensive knowledge of the nuances and complexities of Capital Gains Tax.
Comprehensive CGT services – helping individuals, businesses, partnerships, and trusts with their CGT.
Proactive CGT planning – assisting and advising, where possible, before the CGT event, to ensure the best possible tax outcomes.
Qualified Certified Practising Accountants and Chartered Accountants – giving reassurance, knowing your CGT is done by experienced professionals.
Fixed fees and transparent pricing – no unwelcome surprises or hidden costs.
Tailored CGT advice – friendly, approachable, and bespoke guidance addressing your specific needs.
Friendly, jargon-free advice – practical CGT solutions in a language you understand.
Capital Gains Tax FAQs
Where Can I Find a Capital Gain Calculator?
The Australian Tax Office provides an online CGT calculator, accessible through your myGov account. This CGT calculator takes into account shares, property, managed funds, and other relevant CGT assets.
Is There Capital Gains Tax on Crypto in Australia?
Yes! The ATO classes cryptocurrency as an asset, not currency, and therefore is subject to CGT. Generally, currency isn’t subject to capital gains, unless you hold a significant amount.
Can Capital Losses Be Offset Against My Income?
No, it can’t. If you incur a capital loss, you can carry this forward only to offset any future capital gains. You can’t use it against other income streams, such as wages or company profits.
What Happens With CGT on Jointly Owned Property?
Each part-owner reports their CGT liability in accordance with their share of the property. So, for example, if a property is owned with a 60/40 percent holding, and the property is sold, any gains are split 60 percent and 40 percent, respectively.