ATO-Compliant Capital Gains Tax Valuations
Certified Practising Valuers (CPV)
Melbourne | Brisbane & Surrounds

Capital Gains Tax (CGT) is a tax on the profit you make from selling an asset, such as real estate or your house, shares, or other investments. In Australia, CGT is considered part of your income tax and applies to any capital gain made after September 20, 1985. It's important to note that CGT is only applicable to the profit portion of the sale, which is the difference between the purchase price and the sale price, minus allowable expenses. Example: Suppose you purchased an investment property for $400,000 and sold it later for $600,000. Here's a simple calculation: Purchase Price: $400,000 Sale Price: $600,000 To determine the capital gain: Capital Gain = Sale Price - Purchase Price Capital Gain = $600,000 - $400,000 Capital Gain = $200,000 This $200,000 represents the profit from the sale. If you've owned the asset for more than 12 months, you're generally eligible for a 50% discount on the capital gain, according to the Australian Taxation Office (ATO). Applying the Discount: Discounted Capital Gain = Capital Gain × 50% Discounted Capital Gain = $200,000 × 50% Discounted Capital Gain = $100,000 The discounted amount, $100,000, is then added to your taxable income for the financial year and taxed at your applicable income tax rate. For instance, if your marginal tax rate is 30%, the tax payable on the capital gain would be: Tax Payable = Discounted Capital Gain × Marginal Tax Rate Tax Payable = $100,000 × 30% Tax Payable = $30,000 Thus, you would pay $30,000 in Capital Gains Tax. It’s important to note that the ATO requires you to keep accurate records to correctly calculate your CGT and comply with tax regulations. Understanding these basics can help you plan and manage your tax obligations effectively. The above is only a very basic example on how CGT works and is calculated and shouldn't be relied on as Tax Advice. Speak to your accountant, they will know exactly where you stand. Accurate property valuations are crucial to correctly determining the capital gain, as they establish the property's value at key points, such as purchase and sale.