I want to start a business that will eventually involve me owning a plant and associated equipment for manufacturing purposes. How would Capital Gains Tax apply to these kinds of assets over time if I were to purchase them at the start of my business endeavour and to sell them down the track?
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Answer by LegalEagle™ staff, Melbourne 3000 VIC
- As an individual you are able to take advantage of the 50% Capital Gains Tax (CGT) discount providing you have held the assets for a minimum of 12 months.
- For example you might buy your manufacturing equipment for $150,000 this year and sell it in two years for $170,000. You have made a capital gain of $20,000.
- As an individual you can claim the 50% CGT discount which means you would only pay tax on 50% of $20,000. You would then only need to pay $10,000.
- Additional CGT discounts may also be applied for to reduce the taxable amount even further. However certain thresholds and eligibility tests would need to be passed first and depend heavily on the specific details of your situation.