Harper News

Capital Gains

Land owned before CGT, but can a recent house built on it be CGT-free?

Naturally, a taxpayer will assume that when they build a house, that building will not qualify for CGT exemption until it becomes that taxpayer’s “main residence”. There is however ...

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The CGT implications of subdividing and building on the family property

Given the state of the property market in Australia these days, a not-uncommon situation can arise where a residential property owner seeks to demolish and subdivide the block containing the family ho...

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Active vs passive assets and the small business CGT concession

The small business capital gains tax concessions are extremely valuable, and for small business owners who need to dispose of assets that have risen in value during the time they have owned them, acce...

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Working from home — the tax implications

In general terms, the Tax Office takes the view that expenditure associated with a person’s place of residence is more likely to be of a private nature. However if you produce assessable income at home, or some of it, and you incur expenses from using that home as your “office” or “workshop”, you will generally be in a position to be able to claim some expenses and make some deductions.

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Your practical CGT framework

The term “capital gains tax” (CGT) is perhaps the biggest misnomer in tax. It is not its own, separate tax on capital gains per se. For an individual, it is included as part of that person’s assessable income and subject to tax at their marginal tax rate. When a taxing point for CGT happens (referred to as a CGT event) there is a torrent of rules that taxpayers must adhere to so they can fulfil their tax obligations correctly.

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Property developers warned on contrived structures that muddy income/capital divide

The Tax Office has warned property developers against using trusts to return the proceeds from projects as capital gains instead of income, warning that it has found many instances that had subsequently been shown to be contrived arrangements to allow developers to inappropriately claim CGT concessions.

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Small business CGT concessions, common errors

Small businesses may be eligible for various concessional treatments for transactions that involve capital gains tax (CGT), which can reduce, defer or even eliminate CGT payable (see separate story on page 4). But the Tax Office says that some common mistakes keep occurring on a regular basis in applying the tests for eligibility to the CGT concessions.

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The small business concessions

The small business sector has variously been described as the engine room of the economy as well as the biggest employer in the country – and it’s not hard to see why. Research shows that small businesses were responsible for generating around half of private sector employment.

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Foreign and temporary residents — there’s no longer any CGT 50% discount

Individuals are generally entitled to a 50% discount on a capital gain where a CGT asset (such as a property) is disposed, provided that the asset is held for at least 12 months. However a recent change has altered the tax treatment for some taxpayers. 

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Small business CGT concession common errors

Small business owners may be eligible for various concessional treatments for transactions that involve capital gains tax (CGT). These concessions can reduce, defer or at times even eliminate tax payable from capital gains. Applying these concessions can often trip up small business taxpayers. 

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Selling your business

The last thing on your mind when you first go into a business is the day you lock the door and walk away for the last time. But whether through selling up, retirement, or even due to health reasons, it’s inevitable that you will one day need to consider what is involved in winding up the business, and have some idea about what loose ends may need to be tidied up.

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Small business CGT concessions explained

Capital gains tax (CGT) considerations for small businesses can emerge in regard to all manner of otherwise unremarkable events, including but not limited to the “CGT triggers” list over the page. Business owners should keep CGT in the back of their mind when considering a range of transactions there are activities and transactions that may not obviously, but in fact do, attract tax (which is another good reason to keep an accountant or tax professional in the loop).

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