Capital Gains Tax (CGT) in Australia is levied on the profit made from the sale of certain assets, including real estate, shares, and other investments. However, there are specific exemptions and concessions that can reduce or eliminate the amount of CGT payable.
Key CGT Exemptions and Concessions
Main Residence Exemption
The sale of your primary residence, or main residence, is generally exempt from CGT. To qualify, the property must have been your home for the entire ownership period, not used to produce assessable income, and situated on land less than two hectares.
50% CGT Discount for Individuals and Trusts
Individuals and trusts that hold a qualifying asset for at least 12 months before selling it are eligible for a 50% discount on the capital gain. This concession encourages long-term investment. Note that companies are not eligible for this discount.
Six-Year Rule
If you move out of your main residence and rent it out, you can treat it as your main residence for CGT purposes for up to six years, provided you don't treat any other property as your main residence during this period.
Pre-CGT Assets
Assets acquired before 20 September 1985 are exempt from CGT. However, significant changes to the asset or its ownership structure may affect this exemption.
Personal Use Assets
Items used for personal enjoyment, such as boats or furniture, acquired for less than $10,000 are exempt from CGT. However, capital losses from these assets cannot be used to offset gains.
Small Business CGT Concessions
Eligible small businesses can access several CGT concessions, including:
15-Year Exemption: No CGT on assets held for over 15 years if retiring (over 55) or permanently incapacitated.
50% Active Asset Reduction: A 50% reduction on capital gains from active business assets.
Retirement Exemption: Exemption on capital gains up to a lifetime limit of $500,000, provided the amount is used for retirement.
Rollover Relief: Deferral of CGT when replacing an active asset with another.
How ActOn Wealth Can Assist
Navigating CGT exemptions and concessions can be complex. ActOn Wealth offers tailored financial services to help you:
Identify Applicable Exemptions: Determine which CGT exemptions or concessions apply to your situation.
Strategize Asset Sales: Plan the timing and structure of asset disposals to maximize tax benefits.
Comply with Regulations: Ensure all transactions meet Australian Taxation Office requirements.
