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Calculating and paying capital gains tax (CGT)

A capital gain or loss is the difference between what you paid for an asset and what you sold it for. This takes into account any incidental costs on the purchase and sale. So, if you sell an asset for more than you paid for it, that’s a capital gain. And if you sell it for less, that is considered a capital loss.

Deciding how to calculate capital gains tax

If you sell or dispose of your capital gains tax assets in less than 12 months you’ll

pay the full capital gain. But, you (as an individual) could get a 50% discount on your

capital gain (after applying capital losses) for any capital gains tax asset held for over 12 months before you sell it.

If you’ve made a capital loss, you can deduct this from your capital gains (that you’ve made

from other sources) to reduce the amount of tax. If you don’t have other capital gains (during

that income year) you can carry over any capital losses to other income years—something

handy for another time.

Have you been trading crypto?

We know many clients have gotten involved with trading digital assets or disposing of digit al assets such as Bit coin. If you have done this, and not included it within you tax records or declared it, it is important that you do. Crypto currency and other digital assets as trading,

purchasing and disposing of these assets does indeed trigger a CGT event.

Also if you have been earning interest or staking your crypto you will need to include that money earned as income. This is separate to CGT but still is part of your assessable income.

Paying capital gains tax

Your net capital gains form part of your assessable income in whatever year your

capital gains tax happened. Capital gains tax is payable as part of your income tax assessment for the relevant income year. `Some assets and events are exempt from capital gains tax. These include selling your principal home or personal car, or selling an asset acquired before capital gains tax was introduced on 20 September 1985.

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