• New Wave Accountants

A Guide to Understanding Your Capital Gains Tax

When you make an effort to sell real estate property or a portion of your shares which you consider capital assets, you then have to be prepared to achieve a capital gain or capital loss. With a capital gain, you can look forward to obtaining something in exchange for giving an entity away. Meanwhile, a capital loss involves paying for a specific price so that you can gain an asset in return!

It’s your responsibility as a business owner to include a list of your capital gains and losses when you file for your income tax return and pay for the required taxes. While it’s classified as a capital gains tax (CGT), it’s not actually considered a different kind of tax and is included in your income tax.

Every time you acquire a capital gain, it is automatically added to your assessable income and could further increase the tax you’re required to pay for. Since your tax isn’t retained when your capital gains are involved, it’s best to get a tax accountant’s help to sort out your debts and ensure everything remains organised.

Keep reading below to learn more about controlling your CGT accordingly.

How to Manage Your Capital Assets

Whenever you make a decision that results in a capital loss, you are not allowed to claim it in opposition to your other incomes. However, you may use it to try and pull down a capital gain.

Based on the tax law established on September 20, 1985, when you’ve acquired assets ever since the tax on capital gains began, you must answer to CGT unless it falls under a category that exempts it. Your personal assets that involve your house, vehicle, and furniture are all excluded from CGT. In addition, your depreciating assets which you utilise for taxable reasons also don’t follow CGT laws as well.

Handling Your Capital Gains and Losses

Once you agree to a contract for disposal, that’s the only time you can make a capital gain or capital loss—it’s not when you decide to settle. For example, you close a deal to sell a real estate property in March 2019 but only choose to settle two months later. That way, you have to include the capital gain or capital loss in your 2018-2019 tax return.

For Australian citizens, you are obliged to take care of the CGT of your assets regardless of their geographical location. If you reside in Norfolk Island, any assets you gain starting October 23, 2015, will have a corresponding CGT. Meanwhile, foreign residents owning any asset that involves Australian taxable property are bound to have a capital gain or loss in the event of a CGT.

Ways to Monitor Your Capital Assets

Timing of Acquisition

With the timing of acquisition, you need to figure out the date of your purchase. It’s the day you decided to acquire an asset or when you were appointed as the rightful owner of the investment.

Record Keeping for CGT

It’s crucial to maintain an authentic record of all your transactions, events, and other situations related to your assets so you can determine if a capital gain or loss occurred. You can ask a small business accountant to oversee your records and guarantee there is no missing information.

Joint Ownership

Joint ownership talks about owning a specific asset with one or a few other people. With it, you need to take some time to list down each of your shares or interests regarding the chosen asset to avoid any future complications.


When you learn how to keep track of your capital gains tax, you won’t have a difficult time managing your gains and losses, helping you avoid paying for more than your CGT requires. Hiring a business accountant to take care of your finances is one solution that will allow you to focus on running your company—at the same time, they guarantee to take care of your debts and other financial responsibilities too!

Are you looking for the best accountant in Queensland to help you run your start-up business? New Wave Accounting delivers end-to-end accounting and bookkeeping solutions intending to aid small companies to achieve better opportunities. Get in touch with us today to book a strategy session!

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