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 | | From: | alex | | Subject: | Captial Gains question | | Date: | Sun, 16 Jan 2005 18:01:10 +1100 |
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 | hey people,
I've been putting together a spread sheet, for personal use.
I have looked around for an accurate way to calculate CGT, and find
contradicting solutions.
the ATO says a little something like this:
http://ato.gov.au/individuals/content.asp?doc=/content/12333.htm&mnu=5053&mfp=001
(brief bit at the bottom seems too simplified)
whereas elsewhere has mentioned that the gain should be included in your
income before looking up your tax rate in the table, which is closer to what
I expected, else we would all keep our taxable incomes below 6000, keeping
all of a gain for our selves ?
more specifically, as a barman (till I complete uni), my income is below the
21600 bracket, does this mean if I made a gain of 50000 from shares I'd only
pay 17% ? or am I correct in believing that the 50000 will put me over the
70000 bracket, resulting in a tax rate of 48.5 ?
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| | From: | Travis Morien | | Subject: | Re: Captial Gains question | | Date: | 16 Jan 2005 03:34:45 -0800 |
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alex wrote:
> "Travis Morien" wrote in message
> news:1105867640.503329.257030@c13g2000cwb.googlegroups.com...
> > If you've held the capital gains asset for more than a year, half
the
> > capital gain gets added to your income.
> >
> > So if you earned $15,000 as a bar man and made a $50,000 capital
gain,
> > your taxable income (taxed at marginal tax rates) would be $15,000
+
> > $25,000 = $40,000.
> >
> > If you purchased the asset less than a year ago, you wouldn't get a
50%
> > discount, your taxable income (taxed at marginal tax rates) would
be
> > $15,000 + $50,000 = $65,000.
> >
> > Travis
> > www.travismorine.com
> >
>
> thanks Travis,
> so for the spread sheet, expected CGT for a given sale of shares
(owned for
> less than 12 months) could be calculated by adding the gain to the
wages for
> that year, looking that value up against the table, and taxing the
gain at
> that rate...
>
> from the past example, I earn $15,000 + $50,000 = $65,000
> against current rates that's 42% (plus medicare)
> I take 42% of the $50,000, and that's what I'd expect to pay ?
> (without complicating it with further sales through the year)
The first bit is correct, but you do not pay a flat rate of 42%.
Marginal tax rates mean you pay nothing on the first $6,000. Then you
pay 18.5% (including medicare) on the next margin etc.
Your average tax rate is lower than your top tax rate, you only pay
your highest tax rate on the amount of income you have in that bracket.
See www.travismorien.com/taxplanning.ppt
(For more presentations see www.travismorien.com/presentations)
Travis
www.travismorien.com
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| | From: | alex | | Subject: | Re: Captial Gains question | | Date: | Sun, 16 Jan 2005 23:46:05 +1100 |
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"Travis Morien" wrote in message
news:1105875285.013506.77610@f14g2000cwb.googlegroups.com...
>
> alex wrote:
> > "Travis Morien" wrote in message
> > news:1105867640.503329.257030@c13g2000cwb.googlegroups.com...
> > > If you've held the capital gains asset for more than a year, half
> the
> > > capital gain gets added to your income.
> > >
> > > So if you earned $15,000 as a bar man and made a $50,000 capital
> gain,
> > > your taxable income (taxed at marginal tax rates) would be $15,000
> +
> > > $25,000 = $40,000.
> > >
> > > If you purchased the asset less than a year ago, you wouldn't get a
> 50%
> > > discount, your taxable income (taxed at marginal tax rates) would
> be
> > > $15,000 + $50,000 = $65,000.
> > >
> > > Travis
> > > www.travismorine.com
> > >
> >
> > thanks Travis,
> > so for the spread sheet, expected CGT for a given sale of shares
> (owned for
> > less than 12 months) could be calculated by adding the gain to the
> wages for
> > that year, looking that value up against the table, and taxing the
> gain at
> > that rate...
> >
> > from the past example, I earn $15,000 + $50,000 = $65,000
> > against current rates that's 42% (plus medicare)
> > I take 42% of the $50,000, and that's what I'd expect to pay ?
> > (without complicating it with further sales through the year)
>
> The first bit is correct, but you do not pay a flat rate of 42%.
>
> Marginal tax rates mean you pay nothing on the first $6,000. Then you
> pay 18.5% (including medicare) on the next margin etc.
>
> Your average tax rate is lower than your top tax rate, you only pay
> your highest tax rate on the amount of income you have in that bracket.
>
> See www.travismorien.com/taxplanning.ppt
>
> (For more presentations see www.travismorien.com/presentations)
> Travis
> www.travismorien.com
>
thanks for your help
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| | From: | Travis Morien | | Subject: | Re: Captial Gains question | | Date: | 16 Jan 2005 02:04:46 -0800 |
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| If you've held the capital gains asset for more than a year, half the
capital gain gets added to your income.
So if you earned $15,000 as a bar man and made a $50,000 capital gain,
your taxable income (taxed at marginal tax rates) would be $15,000 +
$25,000 = $40,000.
If you purchased the asset less than a year ago, you wouldn't get a 50%
discount, your taxable income (taxed at marginal tax rates) would be
$15,000 + $50,000 = $65,000.
Travis
www.travismorine.com
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| | From: | alex | | Subject: | Re: Captial Gains question | | Date: | Sun, 16 Jan 2005 22:08:40 +1100 |
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"Travis Morien" wrote in message
news:1105867640.503329.257030@c13g2000cwb.googlegroups.com...
> If you've held the capital gains asset for more than a year, half the
> capital gain gets added to your income.
>
> So if you earned $15,000 as a bar man and made a $50,000 capital gain,
> your taxable income (taxed at marginal tax rates) would be $15,000 +
> $25,000 = $40,000.
>
> If you purchased the asset less than a year ago, you wouldn't get a 50%
> discount, your taxable income (taxed at marginal tax rates) would be
> $15,000 + $50,000 = $65,000.
>
> Travis
> www.travismorine.com
>
thanks Travis,
so for the spread sheet, expected CGT for a given sale of shares (owned for
less than 12 months) could be calculated by adding the gain to the wages for
that year, looking that value up against the table, and taxing the gain at
that rate...
from the past example, I earn $15,000 + $50,000 = $65,000
against current rates that's 42% (plus medicare)
I take 42% of the $50,000, and that's what I'd expect to pay ?
(without complicating it with further sales through the year)
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| | From: | John Wright | | Subject: | Re: Captial Gains question | | Date: | Mon, 17 Jan 2005 13:18:25 +1100 |
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| "alex" wrote
> from the past example, I earn $15,000 + $50,000 = $65,000
> against current rates that's 42% (plus medicare)
> I take 42% of the $50,000, and that's what I'd expect to pay ?
> (without complicating it with further sales through the year)
>
It is not possible to compute the tax your $50,000 cap gain directly in one
step - due to the nonlinear way tax scales work. You have to 1) work out
whether the full, or half the gain is to be included, based on the 1-year
rule, then 2) add this adjusted taxable capital gain to all your other
taxable income to come up with the total taxable income for the year, then
3) apply the tax calculation, e.g. tax of $13,572 plus 42c for income of
each $1 over $58,000 upto $70,000 (for year 04-05) etc. etc. Add 1.5%
medicare on top. This gives you the total tax payable on all your income and
cap gains.
If you did want to know the effective tax $ on your capital gains, do the
same calculation without that $50,000 cap gain. The difference between the
two calculated results is the tax you are paying on the $50,000 capital
gain.
Regards - JW
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| | From: | alex | | Subject: | Re: Captial Gains question | | Date: | Wed, 19 Jan 2005 11:58:23 +1100 |
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"John Wright" wrote in message
news:41eb2073$0$21441$afc38c87@news.optusnet.com.au...
> "alex" wrote
> > from the past example, I earn $15,000 + $50,000 = $65,000
> > against current rates that's 42% (plus medicare)
> > I take 42% of the $50,000, and that's what I'd expect to pay ?
> > (without complicating it with further sales through the year)
> >
>
> It is not possible to compute the tax your $50,000 cap gain directly in
one
> step - due to the nonlinear way tax scales work. You have to 1) work out
> whether the full, or half the gain is to be included, based on the 1-year
> rule, then 2) add this adjusted taxable capital gain to all your other
> taxable income to come up with the total taxable income for the year, then
> 3) apply the tax calculation, e.g. tax of $13,572 plus 42c for income of
> each $1 over $58,000 upto $70,000 (for year 04-05) etc. etc. Add 1.5%
> medicare on top. This gives you the total tax payable on all your income
and
> cap gains.
>
> If you did want to know the effective tax $ on your capital gains, do the
> same calculation without that $50,000 cap gain. The difference between the
> two calculated results is the tax you are paying on the $50,000 capital
> gain.
>
> Regards - JW
>
>
>
thanks John, I was in the mindset that CGT was separate to income tax...
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| | From: | Travis Morien | | Subject: | Re: Captial Gains question | | Date: | 16 Jan 2005 01:29:49 -0800 |
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| If you've held the asset more than 12 months you discount the capital
gain by 50%. If not, you include the whole gain in assessable income.
If you earned $10,000 as a bar man and made $50,000 from shares, your
taxable income would be $35,000 if all the shares were held more than
12 months, if you held less than 12 months your income would be
$60,000.
You'd pay marginal tax rates on $35,000 or $60,000.
Travis
www.travismorien.com
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