Capital Gain Tax Calculator – Calculating Your CGT
Calculate your Capital Gain Tax by using our capital gain tax calculator after putting in the following information, assuming that you only have one capital gain transaction and you don’t have any other capital gains or losses during the year or any carry forward capital loss.
- Your capital proceeds or the sale price
- The purchase price
- The length of asset ownership
- Your current taxable income
The short details of these elements are here:
Capital Proceeds or Sale Price
It is the sale price for which you sell or dispose of your asset.
Purchase Price
It includes the purchasing price, all the costs of its acquisition, and all the costs of its sale, for example, marketing costs, etc.
Length of Ownership
Mention the duration for which you held the asset, whether it’s 12 months or a shorter period.
Current Taxable Income
This is necessary because the capital gain amount is added to your net income, and the inclusive amount is taxed. In other words, your capital gain amount increases your taxable income and the tax rate bracket too.
What is Capital Gain Tax
Capital Gain Tax is a tax that you pay on the net capital gain from selling or disposing of your capital assets, such as property, shares, cryptocurrency, or gold.
How to Calculate Net Capital Gain
You pay Capital Gain Tax (CGT) on your net capital gains calculated after deducting all capital losses during the year or carrying forward from the previous financial year from the capital gains. Then, if you are eligible for a capital gain discount you further reduce this amount.
To qualify for a capital gain discount, you must be an Australian resident, and secondly, the disposed asset should have been in your ownership for more than a year. If you fulfill these conditions, then your net capital gain amount is 50% reduced which means you only pay tax on half of the net capital gain.
Capital Gain Tax Calculation for a Year
With our capital gain tax calculator, the calculation of capital gain tax is simple for a single transaction but it becomes a bit tricky if you have made more than one capital gain transaction. Here are the following steps for correct capital gain tax calculation.
Step 1: The Amount Received for the Asset
This is what you call the sale price or the capital proceeds that you receive if you sell the asset or any amount that qualifies for a capital gain event, like the insurance amount you receive if your asset gets destroyed.
If you sell any asset to your friend for less than its worth, then its current market value will be considered the capital proceeds.
Step 2: Calculate the Cost of the Asset
This is the purchase price plus the other costs you incur on its sale or disposal.
- If you see that you are facing a capital loss, then you will calculate the cost using the reduced cost base.
- For property that you purchased before 21 September 1999, if you have a capital gain on its sale, then instead of availing of the 12-month 50% tax discount, you can increase the cost by indexing the cost for inflation. This will lower your capital gain, and you will have to pay less tax.
Step 3: Deduct Cost from the Capital Proceeds
If the remaining figure is more than zero, then you have a capital gain for the asset.
And conversely, if the remaining amount is less than zero, then you have a capital loss.
Step 4: Repeat the Steps
Follow the same steps above for each capital transaction you have for one financial year.
Step 5: Deduct Capital Losses from Capital Gains
Now subtract your current financial year capital losses from the capital gains. If you don’t have any losses for the current year, but you have carried forward losses from a previous year, then deduct those.
You can choose any capital gain from which you want to subtract the capital losses. It is best to subtract losses from a capital gain that is not entitled to a discount. This will give you the lowest taxable capital gain income.
If you don’t have any loss, then go to step 7.
Step 6: Find the Remaining Capital Gain after the Capital Loss Deduction
Now, if the remaining amount is less than zero, then you have a net capital loss and go to step 8.
If the amount is more than zero, then go to step 7.
Step 7: Apply CGT Discount on the Remaining Amount
Now, if you have owned the sold asset for more than a year and you are an Australian resident too then you are eligible for a 50% discount on the net capital gain.
You can also apply for the 33.33% super funds discount. But companies are not on the eligible candidates list.
For fixed domestic residential property, you can claim super funds up to 60%.
If you have calculated your cost base using the inflation method for properties acquired before 21 September 1999, you are not entitled to any capital gain discount.
Step 8: Show Your Net Capital Gain or Loss in Tax Return
If, after all deductions, you have a net capital gain, then show it in your tax return. This will increase your net income and the tax rate too.
If you have a net capital loss, then you can’t account for it to reduce the net income, but you can carry it forward to subtract it from the capital gain if you have it in the next financial year.
Capital Gain Tax Exemptions
You can use our capital gain tax calculator every time you sell any capital asset. However, some asset sales are exempt from this tax.
Capital Gain Tax Assets | CGT-exempted Assets |
Real estate | Your residential home |
Cryptocurrency | Your personal use vehicle |
Shares or similar investments | Depreciating assets such as business equipment used only for taxable purposes, |
Foreign currency, licenses, leases | Any asset purchased before 20 September 1985 |
Collectibles and personal use assets above $10,000 |
Capital Gain Tax Reduction Strategies
Primary Residence Exemption
Any capital gain that you earn on the sale of your residential place is exempted from capital gain tax.
However, the exception to this rule is if you rent out this house to generate some money. Then you have to pay tax on a part of the capital gain.
Short-term Absence Rule
With the short-term absence rule, you still make your primary residence your residential house even if you move out of it.
If you start residing at some other place and use your primary residential house as a means of income generation, such as renting it out, then if you sell it in the next 6 years and you earn a capital gain, you will not pay any capital gain tax. If you move back into the home within six years, the six-year timeframe resets. This means you can move out again and still get another six years of exemption as your main residence.
So, as long as you move back within six years, you can keep extending this tax-free period.
Investment in Superannuation
Self-managed super funds get a smaller capital gains tax (CGT) discount compared to regular investments. They only get a one-third discount, and the normal tax rate for these funds is about 15%. This means the highest CGT rate is 10%, which is lower than most people’s tax rates. Additionally, when someone starts drawing a full retirement annuity or pension from their super fund, the tax rate on those funds drops to zero.
Plan The Right Timelines
Your time to sell your capital asset affects your tax. If you are expecting a low income in the next year, then it would be better to sell that capital asset in the next year if you are sure to earn a capital gain on that transaction.
Conversely, if you have shares whose worth becomes less than what you paid for them, then sell them first before selling those shares from which you are sure to earn a capital gain so that the capital loss on the less-worth shares can reduce your taxable gain.
Take Advantage of Partial Exemptions
If you hold a property for a year or for a longer time, you can 50% reduce your capital gains tax (CGT). You might also get some exemption if you later live in the rental property.
You can still get a CGT reduction if you use your home for business. If you invest in affordable housing that meets certain criteria and charges discounted rent, you can get a 60% CGT reduction.
You can adjust capital losses to reduce capital gains but not regular income. For further benefits, you must consult a professional for the best advice tailored to your situation.
Conveniently do your CGT calculation with our capital gain tax calculator. By inputting the sale proceeds, purchase cost, ownership duration, and current taxable rate, you can get your capital gain tax to be paid if you have gained a profit. For more capital asset transactions in a year, you need to subtract the losses and discounts to reach the final figure to be included in your taxable income for that financial year.