1. Followed by popular demand, I am writing this post with respect to Australian CGT to help people understanding it better. It is not written from a mechanic perspective of how CGT is calculated or accounted, but from a legal perspective of how the law works. After all, taxation is more legislative matter, not only accounting.
In respect to how CGT is calculated, I personally reckon that ATO has already provided a rather detailed instruction, which you can find via blew website
http://www.ato.gov.au/General/Ca ... -gains-tax-2012-13/
2. Please note that there are many greater and bigger minds than mine have been writing books and books on this topic, and yet none of them would claim that they know all. I am no different except my brain being much smaller, so please be generous and tolerative on my errors, if any, for the sake of my noble intent.
3. Furthermore, this post is to be written in a very casual and informal base, and because of such a big topic, it is going to be written in a way as it goes.
What is CGT?
4. CGT stands for capital gain tax. However, in Australia (Au) it is not a tax in its own right, instead it is more likely to be capital gain rule or regime within the income tax framework. It is an income tax levied on gain derived from capital assets. This is not a uniformed approach internationally.
4.1. In the USA, they have judiciary concept of income equating income with gain, which means it includes gains into its income without a needing for any capital gain rule. Nevertheless, it does have alternative tax rate rule for capital income and some capital sub-provisions.
4.2. In the UK, by contrast they not only have income tax, but also a separate capital gain tax. These are 2 different taxes.
4.3. Australian tax system is taking a position of a combination of these 2. It has only one income tax, but with capital gain provisions mainly in Part 3-1 and Part 3-3 in Income Tax Assessment Act 1997 (ITAA97)
5. Why does it matter since capital gain and income are both taxed under income tax framework? - It matters because not like income,
5.1. Capital gain can be discounted under Division 115, if the taxpayer is an individual or super fund and the underlying CGT asset has been held for more than 12 months.
5.2. Capital gain can be offset by capital losses incurred in current year and capital losses carried from previous years (s.102-5). Furthermore,
5.3. There are various exemptions under Division 118, rollovers under Part 3-3 and various concessions under Division 152.
5.4. In general, a taxpayer would have more incentive to claim a particular gain as capital gain rather than income. It, therefore, would also have potential Part IVA anti-avoidance application, which is out of the scope of our discussion here.
How do tax laws apply to capital gains?
6. First one needs to consider whether the receipt is capital or ordinary income.
6.1. Historically the nature of capital and income is often described in an analogy of tree and its fruit. However, based on the most recent Full Federal Court decision on August v Commissioner of Taxation [2013] FCAFC 85 (7 August 2013), Judges seem to put even more weight than they already have on the concept of original intention when the transaction was entered.
http://www.austlii.edu.au/au/cases/cth/FCAFC/2013/85.html
August case (2013)
6.2. In brief, on the face of the case, the taxpayer generally rented out properties after purchase. If after significant improvements to improve value or re-built on the same site, the taxpayer only disposed the properties when the price was too good to ignore. All of which seems to suggest that the transactions are reasonable to be capital. However,
6.3. The trial Judge, upheld by Full Federal Court, referred to the principles explained by Hill J’s in Westfield case that is the consideration of the test in Myer Emporium Case - “a gain made otherwise than in the ordinary course of carrying on the business which nevertheless arises from a transaction entered into by the taxpayer with the intention or purpose of making a profit or gain may well constitute income”.
6.4. In this case Mr and Mrs August failed to establish the argument, not only from their documents, corroborating witness, but also in their actions, that they did NOT have the intention to realise the increased value by subsequently dispose the developed or re-built properties.
Myer Emporium Case
6.5. In Myer Emporium, it is suggested that there are 3 categories of business income.
6.5.1. Core business receipts, which are in accordance to an ordinary course of trading. It is entailed by the characters of system scale, repetition and purpose, and by substitution rule – replacement of lost of ordinary income.
6.5.2. Incidental business receipts and extra-ordinary business receipt. Despite both of receipts are one-off and non-occurring transactions they would still be ordinary incomes under s.6-5, if the intention of acquisition was to make profits.
As a result, the importance of clear intent as the time of acquisition cannot be underestimated. It cannot be simply based on mere what you say when questioned, instead it would be decided on the actions you took at the time of purchase and how you later hold your properties and documented.
For professionals, you might be interested in reading the below linked article.
http://www.mulr.com.au/issues/31_1/31_1_10.pdf
7. Secondly, does any other provision apply? Anti-overlap provisions: s.118-20 reduces the capital gain by the amount would otherwise assessable under other provisions under ITAA97. This effectively indicates if one gain is treated assessable income under both capital gain rule and other provisions, other provision would prevail.
8. Thirdly, is there a CGT event? And what is the order of applying CGT events?
(to be continued...)
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Further to the above paragraph 6.2, many of us might not be so unfamiliar with the facts in August case that perhaps many of us may acquire or have acquired properties with dual intentions to lease, maybe improve and ultimately make a gain.
Now the tricky question is,
- To what extent, the partial gain-making intent at acquisition would constitute an intention or purpose of making profits, and /or trigger the existence of profit-making scheme?
- Would it depend on the dominance of the gain-making intention or the clearness of it?
From where I see, this still remains uncertain and controversy in great deal.
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要么写中文 起码自己写
转一堆英文可以google到的东西没意思
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Please do not insult me. this is genuine words from myself. and i reserve my copyright if you are going to refer to my comments and opinion. and i am writing my opinion in respect of CGT events as we speak.
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会写中文吗？
会的话每贴给你10分
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Sorry mate, i understand your frustration. As much as i like the idea of getting some points from my viewers, this post is by request from others, he or she does not mind that i write english.
Despite the fact i can write Chinese, it would take me 3 times more effort to write. Blame me that i came here too early to learn typing Chinese. You have to know that back then we didn't even have computer like nowadays.
I only can apologise for any inconvenience causing you. If you are interested in this topic, i would recommend you to take a bit time reading my post. I believe you would find it beneficial. and by all means, please give me points if you think you benefit from my post in any way.
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CGT events
8. Thirdly, is there a CGT event? And why is it important to understand CGT events?
8.1. According to s.100-20, there is a capital gain or loss only when there is a CGT event, and
8.2. s.100-25 states that most CGT events involve CGT assets, yet many CGT events do not involve CGT assets and are directly concerned with capital receipts.
8.3. Under s.102-25, one has to use the most specific CGT event while there are more than one CGT events happened, with exception of J2, K5 and K12.
8.4. Moreover each CGT event also deals with
8.4.1. How an event happens;
8.4.2. How to calculate the capital gain or loss;
8.4.3. The timing of the event, and
8.4.4. What, if any, exception would apply.
8.5. In accordance to the most updated tax legislation s.104-5 summary of CGT events, it has 53 CGT events as at 30 April 2013. In summary, these 53 types of CGT events are grouped into 12, which are legislated in 12 subdivisions within Division 104 of ITAA97:
8.5.1. CGT event A – Subdivision 104-A: for change of ownership
8.5.2. CGT event B – Subdivision 104-B: for hire and then purchase (not lease)
8.5.3. CGT event C – Subdivision 104-C: for CGT asset’s life comes to an end.
8.5.4. CGT event D – Subdivision 1-4-D: for bringing a CGT asset into existence
8.5.5. CGT event E – Subdivision 104-E: in respect of trusts
8.5.6. CGT event F – Subdivision 104-F: in respect of leases
8.5.7. CGT event G – Subdivision 104-G: in respect of shares
8.5.8. CGT event H – Subdivision 104-H: special capital receipts, eg. Forfeiture or inducement payment.
8.5.9. CGT event I – Subdivision 104-I: cease being an Australian resident.
8.5.10. CGT event J – Subdivision 104-J: Rollovers
8.5.11. CGT event K – Subdivision 104-K: other CGT events
8.5.12. CGT event L – Subdivision 104-L: for consolidated group and MEC (Multiple Entry Consolidated) group
8.6. (to be continued…)
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辛苦了。 先存下了慢慢学。 谢谢你！
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这是中文网站
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Really? Is that the best you can come up with?
My response to that would be here is also Australia and the topic is Australian Income Tax Law. Last time i check it is written in English.
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Due to the lack of support, it is most unfortunate that this post will not be updated, at least not for a short while.
After all, explaining how law works is very daunting and time-consuming task. Even for a person who has no life like me, it takes too much time. Please excuse me for being a bit cynical. I guess it is my own fault to choose a wrong audience. This topic is just a bit too complicated for averages.
I sincerely wish you all the best of luck to find the right help when the time comes. Arrivederci! .
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去英文网站说说。 不是只有一个中国人学澳洲税法的。
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Assignment 还是交给老师改吧
这里的人忙着考CPA
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I can see your good intention. Although i have always been keeping myself sharp and on my toes, I think i am probably educating here. What can i learn from sharing my years' knowledge. I thought that is what most people want here "getting informed". Looking at those queries in Oursteps, "What is CGT?, why did ATO sending me bills? Any adivices for my investment properties?, etc."
Anyway, before this is turning inton any meaningless debate, please tell me how you would explain, in Chineses, the difference between "motivation and intention"; "tax exemption, exception and tax free"; and "asset, capital asset, CGT asset and property". It might not be so much different in Chinese, it certainly makes a great deal of difference in law here. By understanding the difference, you could potentially not end up paying millions tax bill (if you have that kind of money) like Mr and Ms August did in the case I quoted the above. Maybe you just haven't been able to see it. That's alright. This is a free country here, you have the right of not reading it. I also have the right keeping or not writing. Speaking of "Right", try to explain, in Chinese, what type of right can be CGT asset facing CGT liability. And For information and the knowledge, like the one i am sharing right now, can it be a CGT asset? tell you that people paid billions tax on it. If you can't appreciate the level of sophisticate in this topic, you would not be able to appreciate what i am offering here.
Arrivederci!
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既然你想知道我为什么对这”GST普及“这么大反应，我就老实说说。
来澳洲的中国人大部分都是精英，但因为各种原因，他们的英文没有达到看懂你的论文的程度，你要普及GST，尽量写得简单，帮助他们。
能看懂你的论文，我想他们可以自己搜了。
这网站有很多有心人，他们很不错，他们都写得简单，易懂。大家只是了解了解，不想做论文。
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推荐一下这个同学的范文
http://www..com.au/bbs/f ... amp;tid=775342&
另外，英文又臭又长，阅读起来达不到中文的速度，更慢
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sorry,打错了，是CGT
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网站发帖用什么语言是每个人的自由，但是总觉得一般来说发帖也希望更够更好地传播自己要表达的信息。从这个角度出发，lz的帖子在这里不是很成功，也是lz没有得到自己想要的回复的主要原因。。。。
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CGT events 恐怕不能算您原创吧？
要不然您受受累把每个event仔细讲讲，例子不用多，一个就够。我在现实工作中还没碰全呢？
多谢！
分分伺候着
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没明白楼主发这贴的主要目的是什么，这一对英文实在懒得看。。
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Obviously the purpose is not you.
One, who likes to seek, flourishes; one yet, who likes to be spoon fed, languishes.
If you can't have some appreciation, at least have some respect.
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人家楼主写什么语言是人家的权利，相信对这个主题感兴趣的人都不介意是中文还是英文的。
这么专业的东西，看不懂也是正常的，可以选择不看呀
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本版规则
1）]互帮互助，友善探讨。不管你是大虾还是新手，请保持基本的礼貌
转贴请注明原始出处。本版鼓励中文发帖，以及把英文原帖翻译成中文发表。
3) 本版不欢迎任何有违澳洲法律的行为。一经举报核实，将立刻删除，多次违反者将会有进一步的处罚。
4）管理员和斑竹有权转移、删除、关闭帖子，并保留取消严重违反论坛规则的用户发贴的权利；
5）注册用户有权以短信息PM方式投诉其他用户的言论或管理员及斑竹的不当管理行为，也可以在站务版公开投诉。
6）请言之有物，纯表情回帖和没有意义的回帖都会被删除。
7）不得在本版块发布任何招工、找工信息。一经发现或举报将被转移或者删除。
希望这里成为大家交流工作和学习有关的心得经验的最佳去处。谢谢大家
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"互帮互助，友善探讨。不管你是大虾还是新手，请保持基本的礼貌"
同意得不能再同意了！
是个好地方，很多人愿意分享自己的经验和专业知识，但有太多人就是无聊不管看到什么都拍个砖，如果真的想学点东西又看不懂英文可以虚心问，没必要说的好像楼主写了英文就犯了大错大忌讳一样。大家都互相尊重一下，这技术贴也就不会这么火药味了。
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to #19, Since you have big 4 background, you should know CGT in its own right is not an easy topic. I can't say i am the expert for this, nor am i a linguist. Notwithstanding, since you asked nicely, i certainly would do my best and try to write something in Chinese.
One thing i would like people to be aware is that not everyone had the luxury to own a computer and/or to learn how to type Chinese. When i left our motherland, the computer was only on DOS language, no mention about Chinese input. it could take me easily 1 minute to write something in english, but tens of minutes in Chinese for a sentence.
to #23, i am glad that you quoted the rule of posting. i believe you also noticed that it is stated here as "encouraged" not "obliged", the word of "encouraged" itself does not have any enforcement. Don't you agree?
At last, to #24, I really appreciate your support. This means a lot to me. It tells me that my country men are still capable to show some appreciation, instead of only knowing to demand, and thanks for giving the world a bit more hope.
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Yes, you are right. The CGT events would not be my original. that is why they are all referred to the legislation, if you noticed.
Anyway, since you asked so nicely, i am willing to practice my chinese typing skills.
CGT event A: 主要发生于买卖， 澳当地税法强调的是拥有权的转让。 拥有权不光是法律拥有， 也包括实质意义上的享用拥有。 (beneficial ownership)
时间是， 如果有合同，大多以合同签写日为event time. 如果没有合同，就以产权的转移日为准。
这里之所以用“大多” 是应为在实体操作中有很多非合同的协议的时间， 虽然在合同签写之前，但它也会成为event time。
“太累了” 这一段话就花了我半个多小时。
CGT event B： 下回分解 ：）
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近日与友人对CGT中文称呼有点探讨， 据大多人称网上已有人翻译为“资产增值税”， 小编以为此译称有点混淆原意， 原因如下：
1） 增值税已是现存专有名词， 原文为value added tax， 然而value added tax 并非收入税。而澳洲的增值税是GST (Goods & Service Tax)。
2） CGT （capital gain tax) is not levied when the value is increased, it rather is levied when there is a gain derived from capital. 直白的说， 税不是因为有价值的增长才征收的， 而是因为有收益。
3）如我之前所述，“capital gain tax is not a tax in its own right, it is rather a capital gain rule in income tax regime."（see Supra paragraph 4); 所以,如果income tax 被译为“收入所得税”的话， 小编以为那CGT如译为“资产/本增长（收益）所得税”，简称“资产增长所得税”， 要比“资产增值税”来的更贴切一点。
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i like your english, like your professional style writing, like your research, question, and every piece of zhuangbilities
我喜欢你的英语，喜欢你的专业写作技能，喜欢你的调研，问题和每一份的装逼。 鼓掌～
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I like your humor.
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Question: I sold my investment property A and geared the capital gain 50k. And the same financial year I bought another investment property B and paid 30k stamp duty. Can this capital gain be offset by stamp duty? Thx
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