The capital gains tax (CGT) discount can reduce by 50% a capital gain that you make when you dispose of (sell) a CGT asset that you have owned for 12 months or more. However, the discount is only available to:
The most notable omission from this list is companies. They are not eligible for the general discount. This should be factored in when assessing which entity is chosen to acquire a CGT asset.
The tax legislation requires that to qualify for the general discount, the asset must have been acquired at least 12-months before the time
of the CGT event (sale).
The 12-month period requires that 365 days (or 366 in a leap year) must pass between the day the CGT asset was acquired and the day on which the CGT event happens…effectively 12-months and two days! If a taxpayer is nearing the 12-month mark, they should consider delaying the sale where possible until this timeframe is satisfied and therefore becomes eligible for the discount.
For the purposes of satisfying the 12-month holding period, beneficiaries can treat an inherited asset as though they have owned it since:
the deceased acquired the asset, if they acquired it on or after 20 September 1985
the deceased died, if they acquired the asset before 20 September 1985.
Note more generally that for CGT assets acquired before 20 September 1985, no CGT is payable anyway.
The CGT discount no longer applies to discount capital gains of foreign or temporary residents or Australian residents who have a period of
foreign residency after the below date. However, the CGT discount will still apply to the portion of the discount capital gain of a foreign
resident individual that accrued up until 8 May 2012 (the date of announcement).
This measure applies where:
The effect of the measure is to: