If you sell CGT assets (for instance shares and real estate) you acquired on or after 20 September 1985, and you make a profit on sale; you are liable to pay tax. This was the date when the CGT provisions were first introduced in Australia. This means any assets you acquired before this date are excluded from these provisions.

A CGT event will normally arise when you sell a CGT asset or gift it to someone.

The following formula is used to calculate a capital gain:

Capital proceeds - Cost base = Capital gain

The ‘capital proceeds’ is the amount you receive on sale of your CGT assets. The ‘cost base’ is the purchase price plus incidental costs associated with buying and selling your CGT assets. It may also include any capital improvements you make to your CGT assets, any costs to protect your CGT assets, and ‘non-capital costs’ (for instance interest payments) that are not a tax deductible expense. For more details you can read the Australian Taxation Office publication ‘What is the cost base?’

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