CGT Articles

CGT – Property Development

CGT - Property Development The revenue/capital distinction It is very important to determine whether the property is being sold on revenue or capital account as it determines whether: any gain is exempt because it is a disposal of a pre-CGT asset the 50% discount and the CGT small business concessions will be available capital losses can be recouped (they can only be offset against capital gains). The sale of property will generally be on capital account where it represents the mere...

CGT Earnout Arrangements

CGT Earnout Arrangements Capital Gains Tax (CGT) Earnout arrangements are generally where a business is sold for a set amount plus a percentage of profits in the future for a specified period.  The tax treatment of these rights to income in the future has varied over the years. The latest change was provided for by the Tax and Superannuation Laws Amendment (2015 Measures No 6) Act 2015 (the legislation) which introduced rules into the Income Tax Assessment Act 1997 (ITAA 97) that took effect...

Allocating value to business assets

Allocating value to business assets When selling/buying the assets of a business, for CGT and depreciation purposes it is necessary to allocate the consideration received/paid for each of the assets.  Due to the differing taxation implications for both, the purchaser and vendor may have conflicting interests when it comes to doing this allocation. Usually the Tax Office will accept the figures allocated in the contract between arm’s length parties.  Where the contract does not allocate the...