Capital Gains Tax in Australia

Capital gains tax in Australia applies when a profit is made on the disposal of a capital asset that was acquired after 20 September 1985. Capital assets are defined in the legislation to be “any kind of property” or “a legal or equitable right that is not property.”

There are some disposals that will be subject to CGT exemptions, the most common of these being the main residence exemption. The total gain of a taxpayer is the total profit made from the sale of an asset. The total profit is obtained by subtracting the cost base from the capital proceeds.

Once the total gain has been worked out, the net gain is worked out by applying any capital losses, then applying the CGT discount if applicable. You can use a tax calculator to work this out.
After calculating net capital gain, the taxpayer who disposed of the property includes the net capital gain in his or her assessable income when their tax returns are lodged.

Capital Gains Tax on Shares

When you are buying and selling shares, and you hold on to them for capital growth, then you will incur a capital gain or loss when you sell them. If you hold onto the shares for 12 months, you may be entitled to a CGT discount.

Trading on the Forex Market

If you are buying and selling shares online with the purpose of making a short term profit, your activity may be considered a revenue gain or loss. For instance, if you are trading currency in the Forex market, you are often trying to profit from short term fluctuations in the money market. This kind of acitivty could amount to a revenue gain or loss. Any loss would be subject to the non commercial loss provisions for individuals.

Trading Precious Metals

In contrast, buying gold and other precious metals and holding onto them for long term capital appreciation is more likely to be taxable under the capital gains tax provisions.