Capital Gains Tax Question
Once you have calculated your taxable capital gain, is this added to your taxable income or just calculated seperately at your nominal tax rate ?
thanx
It is added to your taxable income.
Eg. Say you earn $50,000 at work and then have a “taxable” gain of say $ 40,000, then your taxable income for that year will be $90,000.
Not allowing for income splitting between spouses in the abouve example.
MJK
Further to the above example, if the gain is realised after 12 months of holding, the actual taxable income is $50k plus $40k x 50% = $70k. ie by holding the asset longer than 12 months before dispose it, 50% discount apply on the gain for tax purposes.
Hope it helps.
Ta, Paul
Hi
How would the capital gains affect someone who has bought the property jointly with another party (not a spouse)?cheers
M.EHi Ms Elvis,
If you shared a property with someone other than your spouse, you’d account for only your share of the capital gain. ie if you owned 40% and held it for more than 12 months, then using the same eg above, your taxable capital gain is 40k x 50% x 40%.
Regards
Jeanne [
]Generally if you have bought half a property (with another person buying the other half with you) without any formal agreement (formal partnership for instance) then by default you have what is known as an informal partnership and the capital gain would be split evenly between the 2 of you.
So you will need to include 50% of the gain in your tax return, and your informal partner will need to include 50% in theirs.
However, if there is a reason as to why it should not be 50% each then this is fine too – eg. if you only put in 20% of the initial capital then you should only be taxed for 20% of the gain. Similarly, if you have only been receiving say 30% of the rental income you should only be taxed on 30% of the gains.
Hope this helps! [
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