Capital gains tax (CGT) is a tax applied to the profit gained on the disposal of an asset. Capital gains tax is not an independent tax to income tax, but rather, forms part of a person’s or entity’s taxable income. On the other hand, where there has been a capital loss, that is, where you have purchased an asset and sold it at a lower price, the loss will not be applied as deductible to tax income. Rather, the loss can be offset against a capital gain in the same year, or carry on to offset against a future capital gain.
There are deductions and discounts associated in calculating capital gains tax (CGT) and a chartered accountant or accountant should be consulted when purchasing assets to ensure that adequate details, documents and records regarding the purchase price and costs involved with maintaining the property are kept. This can help reduce the CGT payable in future, in some cases.
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