An Australian company purchases a commercial property for $2.5 million and holds it for 18 months before selling for $3 million. What CGT discount, if any, applies to this transaction?
Correct Answer
D) No discount; a company cannot claim the CGT discount however long it holds.
Companies are not entitled to the CGT discount regardless of how long they hold an asset. The 50% CGT discount only applies to individuals and trusts for assets held longer than 12 months, not to companies.
Why This Is the Correct Answer
Division 115 of the Income Tax Assessment Act 1997 gives the CGT discount only to individuals, trusts and complying super funds. A company pays tax on the whole $500,000 gain at its company tax rate, however long it held the property.
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A property investor purchased an investment property for $500,000 and sold it 18 months later for $600,000. What CGT discount are they entitled to as an Australian resident?
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