An investor sells a Queensland investment property for a profit after holding it for more than 12 months. For capital gains tax (CGT) purposes, the investor may be entitled to:

Q: What is the correct answer to: An investor sells a Queensland investment property for a profit after holding it for more than 12 months. For capital gains tax (CGT) purposes, the investor may be entitled to:

The correct answer is A 50% CGT discount on the capital gain (for individual taxpayers). Under federal tax law, individual taxpayers who hold a CGT asset for more than 12 months are entitled to a 50% discount on the capital gain. The discounted (halved) gain is then added to the taxpayer's assessable income and taxed at their marginal rate.

Q: What background knowledge is needed for this Finance Taxation question?

The 50% CGT discount was introduced in 1999 to replace the indexation method. It applies to individual taxpayers and trusts (not companies). The 12-month holding period encourages longer-term investment. The discount is applied after offsetting any capital losses.

Q: What is a good way to remember the answer to this Finance Taxation question?

Hold for 12+ months, get 50% OFF the capital gain. Half the gain, half the tax. Only for individuals, not companies. Investment property held over 12 months? Individual pays tax on only HALF the gain. Under 12 months? Full gain taxed.

Q: What exam tip applies to this Finance Taxation question?

The 50% CGT discount requires 12+ months holding by an individual. Companies do NOT get the discount.

Q: How does this Finance Taxation concept apply in Australian real estate practice?

An investor sells a Queensland property after 3 years for a $200,000 profit. The 50% CGT discount reduces the taxable gain to $100,000. At a 37% marginal tax rate, the tax payable is $37,000 instead of $74,000 without the discount.

Question

Finance TaxationQLDMEDIUM

An investor sells a Queensland investment property for a profit after holding it for more than 12 months. For capital gains tax (CGT) purposes, the investor may be entitled to:

Answer Options

A

A full exemption from CGT

B

A 50% CGT discount on the capital gain (for individual taxpayers)

C

A flat 15% CGT rate

D

Deferral of CGT until retirement