Calculating and minimising capital gains tax
While many business owners are familiar with capital gains tax, calculating and minimising capital gains tax can still get confusing. For business owners who are keen to learn more about capital gains tax, we are here to assist. To help you gain a better perspective, our team has compiled the essential things that you need to know in calculating and minimising capital gains tax below.
What is capital gains tax?
The Australian Taxation Office website defines capital gains tax as the kind of tax applied on an individual’s capital gain from the sale or disposal of any capital asset. A capital gain is calculated by subtracting the cost of the sale of a capital asset from the amount at the time it was originally acquired.
Capital gains tax is paid for every capital property or capital asset sold within a taxable year. More so, capital gains tax is also not a separate tax, but a kind of tax added on top of an individual’s taxable income for a year.
Calculating capital gains tax
When it comes to calculating capital gains tax, the discount and indexation methods are popular choices. Calculating capital gains tax using the discount method includes applying all types of discounts that any taxpayer is eligible to have to help reduce his capital gains tax payments. Getting a 50% capital gains tax discount by holding on to a capital asset or property for more than 12 months before disposing of the same is one of the most common kinds of discounts available to any taxpayer.
Another form of calculating capital gains tax other than using the discount method is opting for the indexation method. The indexation method is the better choice for calculating capital gains tax when a taxpayer has incurred substantial losses for holding on capital assets and properties acquired on or before 1999.
Minimising capital gains tax
There are several ways for a taxpayer to avail of a reduction of capital gains tax payments. Aside from availing discounts, one way of minimising capital gains tax is deducting capital losses from capital gains. Depending on their options, a taxpayer can deduct capital losses from the capital gains tax they acquired in previous taxable years or the present year.
On top of deducting capital losses, other methods of minimising capital gains tax payments include increasing a taxpayer’s cost base and maximising capital gains tax exemptions available for small business owners meeting the requirements.
How BMR Business Solutions can help
Any business owner or taxpayer can choose the option of calculating capital gains tax on their own. But this task is not for everyone. Instead of calculating and minimising capital gains tax on your own, asking for help from professionals is the better choice.
If you need assistance in calculating capital tax gains, BMR Business Solutions is the perfect partner. Here at BMR Business Solutions, we have a team of experts ready to assist you with your needs. For more information on calculating capital tax gains, you can get in touch with our skilled team today or check online for a range of our finance, accounting, and our other specialised services.
Contact us today on 07 3353 7111 to discuss how we can assist with your capital gains tax queries.