Here are some important information in regards to Capital Gains Tax

 

1. What is a major capital improvement?

If you make a capital improvement to an asset (such as renovating a house), it's considered a 'major capital improvement' if its original cost is:

. more than 5% of the amount you receive when you dispose of the asset, and

. more than the improvement threshold for the income year in which you dispose of the asset.

 

2.Calculating your capital gain or loss on major improvements:

A − B = C

Where:

A is the proceeds of sale attributable to improvements

B is the cost base of improvements

C is the capital gain on major improvements

 

3. Improvement Thresholds: The improvement threshold is a value used to determine when a capital improvement to a pre-capital gains tax asset may be treated as a separate asset for CGT purposes under section 108-70 of ITAA 1997. The improvement threshold is indexed annually and announced before the commencement of the financial year to which it applies.

. Income year 2018–19: $150,386

. Income year 2019–20: $153,093

. Income year 2020–21: $155,849

 

These are general things that you need to keep in mind when it comes to CGT, specifically regarding to Improvement Thresholds. As it concerns your income, the better understanding you have, the more precisely you make decisions on your business.

 

Source: ATO