Capital Gains Tax Estimator
About the Capital Gains Tax Estimator
Capital Gains Tax Estimator provides an indication of the amount of capital
gains tax you may be required to pay on an investment property. Under the new Capital
Gains Tax legislation which came into effect on the 30th of September, 1999, it
is possible for an individual to calculate the CGT they will have to pay in one
of two ways. We call these the "old" and "new" regimes. The old regime, introduced
in 1985, calculates CGT by indexing capital gains to take account of inflation during
the period the asset was owned. To determine the amount of capital gains tax payable
the indexed capital gain is then treated as income and the investors marginal tax
rates apply. The new regime, introduced on 30th of September, 1999 calculates CGT
by applying the individual's marginal tax rate to half of the total capital gain.
There are a large number of rules relating to capital gains tax, particularly concerning
what are acceptable deductions. You should only include costs which can legitimately
be deducted for taxation purposes.
1. Fees for tax advice are only taken into account when incurred after 30 June 1989,
and when advice was provided by a recognised professional tax adviser.
2. Capital improvements are defined as capital expenditure incurred to increase
the value of the CGT asset, if the expenditure is reflected in the state or nature
of the asset at the time of sale.
3. Among other capital costs include any capital expenditure you incur to preserve
or defend your title or rights to the asset.
4. If the payment you receive for an item making up part of the asset is greater
than its depreciated value, it will be necessary to adjust the cost base. This is
done by subtracting the sum of the depreciation and the balancing amount. (The balancing
amount is equal to the difference between the sale cost of the item and its depreciated
5. Under the old capital gains tax regime it used to be that indexing was calculated
over the full period between purchase and sale. It is now the case that the capital
gain is only indexed over the period between purchase and 30th of September, 1999.
6. Capital losses can only be used to offset other capital gains for tax purposes.
It is not possible to use capital losses to reduce taxable income from other sources.
7. For more information about capital gains tax and investment properties visit
the Australian Taxation Office website www.ato.gov.au