Glossary · Australian property
Capital gains tax (CGT).
Tax payable on the capital gain when an asset is disposed of, calculated as sale price minus cost base, with concessions for individuals holding 12+ months.
Capital gains tax in Australia is governed by ITAA 1997 Part 3-1. The capital gain on disposal is sale price minus cost base (s100-45 / s102-5).
The cost base has five elements per s110-25: purchase price, acquisition costs (stamp duty + legal), holding costs for investments, capital improvements, and disposal costs.
Individuals, joint owners, and trusts holding the asset for 12+ months get a 50% discount on the gain (s115-25). Companies are excluded. Flat 30%.
Main residence exemption (s118-110) and the 6-year absence rule (s118-145) can fully or partially exempt the gain.
Worked example
Sold for $900,000. Cost base $620,000. Gain = $280,000. Held >12 months as individual, 50% discount applies, taxable gain $140,000 added to assessable income.
Source
Income Tax Assessment Act 1997 (Cth) Part 3-1.
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