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Capital Gains Tax (CGT) is not really a separate tax but is what you need to include on your income tax return for any net capital gain incurred in a financial year. You can use different formulas to calculate your capital gains depending on your assets, like-

  •  Indexation method: For assets that you acquire before 11.45am on 21 September 1999 and owned for at least 12 months;
  • CGT discount method: For assets that you held for 12 months and for which you are not using the indexation method;
  •  Other method: For the assets that are held for less than 12 months.

“CGT discount method” is applicable for the assets that you held for 12 months or more before the relevant CGT event. If you are an individual holding such asset/s, you are eligible for a 50% discount. But if you make a capital loss it can only be offset against other capital gains that have to be applied before the 50% discount. To calculate your capital gains under discount method first, you have to subtract the cost base from the capital proceeds then, you have to deduct your capital losses (if any) and lastly, you have to reduce it by the relevant discount percentage.
For the final calculation of your capital gains you have to keep proper records of acquisition, maintenance and improvement of the property to make it error free. Like-purchase receipts, expenses record, investment mortgage, receipts of land taxes, insurance bills and rates etc.  

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