Tax Tips – Capital Gains Tax
Executive Summary About Tax Tips – Capital Gains Tax By Neil Handley
Capital Gains Tax
CGT is payable, in full, on the sale of your PPR if it is not in the name of an individual who lives there. SALE OF LAND
Assuming a profit on the sale of land is a capital profit, no tax should be payable on the sale because it was purchased before 20th September, 1985. * The land must have been purchased for some purpose other than to subdivide and sell, for example, farming, home or to operate a business,
* If the profit is a capital one and the property is pre CGT (Capital Gains Tax) no tax should be payable on the sale of the divided lots.
Note that buildings are considered separate assets from the land so constructing buildings on the land to sell compromises the claim that the profit is capital in nature.
DEATH
In most circumstances death will not trigger CGT (Capital Gains Tax), but the CGT clock will start ticking on pre 19th September, 1985 assets, so it is important to have these valued at the date of death. Most pre 19th September, 1985 assets will, in the hands of the executor or beneficiary, have a cost base of market value at the date of death. So when sold CGT will be payable on the difference between the market value at the time of death plus improvements, holding costs and selling costs, and the sale price.
The main residence of the deceased will not attract CGT if sold within two years of death. This applies to pre 19th September, 1985 homes even if they weren’t the deceased’s home at the date of death. This concession may not apply to post 1985 homes.
SWAPPING
If you are considering swapping houses to claim rental deductions make sure you live in the home before swapping. This will allow you to exempt the home from capital gains tax for up to 6 years. You can move out of your main residence and retain your exemption for CGT.
Capital Gains Tax and You
Executive Summary About Capital Gains Tax and You By Dassana Jayalath
The current tax system imposed on corporations by the U.S. government is at best, a biased system; for corporations that have a net profit, taxes on those profits amount to a full one-third. Now, you add to that tax a capital gains tax that is levied on the investment capital of that corporation, and you have the makings for a tremendous tax liability, or do you?
The actual income tax paid by corporations and the tax paid as a capital gains tax has diminished tremendously over the last thirty or forty years, and apparently not many of the citizenry of this country, nor the media are asking any questions.
The first thing you must understand when dealing with the corporate tax structure, is that for the most part, many large corporations do not pay the complete 30% tax that would typically be levied against an individual if they were in the same situation; corporate accountants and the sheer process by which corporations must report their income, expenses, deductions, depreciation, dividends, and any other financial transactions allows for huge deductions that typically offset any tax due.
As for the capital gains tax, it is at an all time low, and President Bush has given corporate America and even greater gift of capital gains exemption on foreign income. Could you imagine how excited the average citizen would be to find their income had been exempted for a couple of years from tax?
When you have large corporations that are obviously reporting earnings and paying dividends, yet they pay no tax, you should be tipped off to the fact that there is a problem. The latest proposals have been to eliminate the corporate tax altogether.
This would leave only the capital gains tax, and would shift the tax burden to the individuals of this country; that is a tremendous shift from the post-war era of the Second World War, when corporations and individuals shared the responsibility almost equally.
Thanks to the lobbying done by corporate lobbyists over the last thirty years, we’ve finally reached the point of no return. The latest proposals have come from within the halls of Congress to eliminate corporate tax, and let the average taxpayer assume all the responsibility.
Medicare, social security, and income taxes take a larger portion of our dispensable income each year. As pointed out by the individuals who are in favor of eliminating corporate tax, it would encourage capital investment and job growth in this country and that is absolutely true, it theoretically would do just that.
Communism works in theory. Many individuals believe it is simply another way to provide tax-free income to CEOs, and Board Members. The latest scandals such as Enron and HealthSouth have shown this country real hard evidence of the corporate abuses that are rampant in this country, and so far uncontrolled.
The Sarbanes-Oxley Act has taken great steps toward greater accountability on the part of the corporate environment, but elimination of corporate tax is simply a legal way to avoid paying the tax.
When you factor in the ability of the wealthy and the corporate entities of this country to hire brilliant accountants that find loopholes in the tax system, and relieve their clients entirely of their tax liability, you cannot believe that the current system operates for the people, by the people, can you?
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