Capital Gains Tax Estimator

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About the Capital Gains Tax Estimator

The 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.


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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 value.)
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