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Essay / Research Paper Abstract
In Australia capital gains are taxed as a part of income. The basis of the calculations (the CGT calculations) of the gain relies in the base cost. This 11 page paper examines how the cost base calculated, what is and is not allowed and how indexation takes place. The bibliography cites 10 sources.
Page Count:
11 pages (~225 words per page)
File: TS14_TEauscostbase.rtf
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Unformatted sample text from the term paper:
tax return prepared for income tax purposes. The capital gain that is made is then taxed at the marginal rate of the tax payer (ATO, 2004). The assessed capital gain,
put simply, is the total of the realised capital gains for the year less any capital losses, which may also include losses brought forward from pervious years, ands lass any
applicable capital gains tax discount or concessions (ATO, 2004). The assessment takes place when a capital gains tax event takes place, this is
when there is a capital gain made or a capital loss incurred. This is normally a sale or there transfer of the asset, but is not limited to this. For
example, in a managed fund where there is a distribution of capital, this is a CGT event (ATO, 2004). The same is true if there is a distribution from
a trust (ATO, 2004). The calculation of the capital gains tax it is the difference between the cost base and
the proceeds. If the cost base is lower that the proceeds there is a capital gain, if the base cost is higher than the proceeds there is a loss (ATO,
2004). From this, it is apparent that a very important aspect of capital gains tax calculation is the understanding of how this base cost is calculated (ATO, 2004).
It may be assumed that the cost base s the price paid for the asset, or the consideration given, however there are many
other aspects to assessing the base cost other than simply the purchase price. The first adjustment and possibly the most common is that of indexation. The cost of an
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