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本帖最后由 3IX37 于 2013-11-5 08:36 编辑
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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“家乡特色的年饭”- 面拖蟹 （PATRICKZHU，SHANGHAI) (2008-2-1) patrickzhu 
发表于 2013-11-3 19:39
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. 
辛苦了。 先存下了慢慢学。 谢谢你！
