Capital gains tax - Citizendia

A capital gains tax (abbreviated: CGT) is a tax charged on capital gains, the profit realized on the sale of a non-inventory asset that was purchased at a lower price. Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated Payroll tax generally refers to two kinds of taxes: Taxes which Employers are required to withhold from Employees Pay, also known as Withholding Stamp duty is a form of Tax that is levied on documents Historically a physical stamp (a Tax stamp) had to be attached to or impressed upon the document to denote Land value taxation (LVT (or site value taxation) is an Ad valorem tax where only the value of land itself is taxed A sales tax is a Consumption tax charged at the Point of purchase for certain goods and services Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. A flat tax (short for flat rate tax is a Tax system with a constant tax rate The tax tariff and trade laws of a political region State or Trade bloc determine which forms of consumption and production tend to be encouraged A tax haven is a place where certain Taxes are levied at a low rate or not at all In Economics, tax incidence is the analysis of the effect of a particular Tax on the distribution of economic welfare. In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is A proportional tax is a Tax imposed so that the Tax rate is fixed as the amount subject to taxation increases A progressive tax is a Tax imposed so that the Tax rate increases as the amount subject to taxation increases A regressive tax is a Tax imposed in such a manner that the Tax rate decreases as the amount subject to taxation increases Tax advantage refers to the economic bonus which applies to certain accounts or Investments that are by Statute, tax-reduced tax-deferred or tax-free Personal income taxes See also Income tax in Australia Only the federal government imposes income taxes on individuals and this is the most significant source of Taxation in the British Virgin Islands is relatively simple by comparative standards photocopies of all of the tax laws of the British Virgin Islands would together amount to about 200 The level of Taxation in Canada is average among Organisation for Economic Co-operation and Development (OECD countries Taxes provide the most important revenue source for the Government of the People's Republic of China. See Government of Colombia for a wider perspective of Colombian government See Government of France for a wider perspective of French government Taxes in Germany —being a Federal Republic —are levied by the federation ( Bund) the States ( Länder) as well as the HK Inland Revenue Ordinance Cap112 is one of Hong Kong's Ordinances Taxes in India are levied by the Central Government and the State Governments This article ls with Taxation in Indonesia or pajak. Definitions "Pajak" in Indonesian for Tax and taxes whereas " Perpajakan The system of Taxation in Ireland is broadly similar to the system of Taxation in the United Kingdom. The Netherlands has a rich history dealing with taxation predating the Romanic period. Taxation in New Zealand is collected at a national level by the Inland Revenue Department (IRD on behalf of the Government of New Zealand. The Income tax in Peru is collected by the Superintendencia Nacional de Administración Tributaria, best known as SUNAT. The Russian Tax Code is the primary tax law for the Russian Federation. Individual income tax in Singapore forms part of two main sources of Income tax, the other being Corporate taxes on companies In Tanzania the Income Tax Act 2004 came into effect in July 2004 Taxation in the United Kingdom may involve payments to a minimum of two different levels of government The central government ( Her Majesty's Revenue and Customs) Taxation in the United States is a complex system which may involve payment to at least four different levels of government and many methods of taxation Value added tax ( VAT) or goods and services tax ( GST) is a consumption Tax levied on value added. Comparison of Tax Rates around the world is a difficult and somewhat subjective enterprise This table lists countries by total 2005 Tax revenues (federal state and local as a percentage of GDP (Gross Domestic Product Economic policy refers to the actions that Governments take in the economic field. Monetary policy is the process by which the Government, Central bank, or monetary authority of a country controls (i the Supply of Money, A central bank, reserve bank, or monetary authority is the entity responsible for the Monetary policy of a country or of a group of member states In Economics, money supply, or money stock, is the total amount of money available in an Economy at a particular point in time The gold standard is a monetary system in which a region's common media of exchange are paper notes that are normally freely convertible into pre-set fixed quantities of Gold Fiscal policy, taking the scope of Budgetary policy, refers to government policy that attempts to influence the direction of the economy through changes in government taxes Government spending or government expenditure is classified by economists into three main types A budget deficit occurs when an Entity (often a Government) spends more Money than it takes in Government debt (also known as public debt or national debt) is Money (or credit) owed by any level of government either Central government Trade is the willing exchange of goods, services, or both Trade is also called Commerce. For other uses of this word see Tariff (disambiguation. A tariff is a tax imposed on goods when they are moved across a political boundary A trade pact is a wide ranging Tax tariff and trade pact that often includes Investment guarantees The field of finance refers to the concepts of Time, Money and Risk and how they are interrelated In Economics, a financial market is a mechanism that allows people to easily buy and sell ( Trade) financial Securities (such as stocks and bonds There are two basic financial market participant categories Investor vs Corporate finance is an area of Finance dealing with the financial decisions Corporations make and the tools and analysis used to make these decisions Personal finance is the application of the principles of Finance to the monetary decisions of an individual or family unit Public finance is a field of economics concerned with paying for collective or governmental activities and with the administration and design of those activities Financial regulations are a form of Regulation or supervision which subjects Financial institutions to certain requirements restrictions and guidelines aiming to A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money Fractional-reserve banking is the banking practice in which Banks keep only a fraction of the value of their Bank notes and demand deposits in reserve Full-reserve banking is the Banking practice in which the full amount of each depositor's funds are available in reserve at the bank when each depositor Free banking is a theory of Banking in which commercial banks and market forces control the provision of banking services Islamic banking refers to a system of banking or banking activity that is consistent with Islamic law ( Sharia) principles and guided by Islamic economics In Business and Accounting, assets are everything owned by a person or company (all tangible and intangible property that can be converted into cash. The most common capital gains are realized from the sale of stocks, bonds, precious metals and property. Not all countries implement a capital gains tax and most have different rates of taxation for individuals and corporations.

For equities, an example of a popular and liquid asset, each national or state legislation, have a large array of fiscal obligations that must be respected regarding capital gains. Software for Fixed assets management and Stock control developed in 2004. Market liquidity is a Business, Economics or Investment term that refers to an Asset 's ability to be easily converted through an act of buying Taxes are charged by the state over the transactions, dividends and capital gains on the stock market. Dividends are payments made by a Corporation to its Shareholder members A stock market, or (equity market is a private or public market for the trading of company Stock and derivatives of company However, these fiscal obligations may vary from jurisdiction to jurisdiction because, among other reasons, it could be assumed that taxation is already incorporated into the stock price through the different taxes companies pay to the state, or that tax free stock market operations are useful to boost economic growth. A share price is the price of a single share of a company's Stock. Economic growth is the increase in the amount of the goods and services produced by an economy over time

Tax systems

Argentina

There is no capital gains tax charged in Argentina. For a topic outline on this subject see List of basic Argentina topics.

Australia

Main article: Capital gains tax in Australia

Capital gains tax in Australia is only payable upon realized capital gains, except for certain provisions relating to deferred-interest debt such as zero coupon bonds. Capital Gains Tax (CGT in Australia applies to the capital gain made on disposal of any asset except for specific exemptions For a topic outline on this subject see List of basic Australia topics. Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets Debt is that which is owed usually referencing Assets owed but the term can cover other obligations A Zero coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its Face value, with the face value The tax is not separate in its own right, but forms part of the income tax system. The proceeds of an asset sold less its 'cost base' (the original cost plus addition for cost price increases over time) are the capital gain. Discounts and other concessions apply to certain taxpayers in varying circumstances. From the 21st of September 1999, after a report by Alan Reynolds the 50% capital gains tax discount has been in place for individuals and some trusts that acquired the asset after that time, however the tax is levied without any adjustment to the cost base for inflation. Alan Reynolds is one of the original supply side economists He is currently Senior Fellow at the Cato Institute and was formerly Director of Economic Research The amount left after applying the discount is added to the assessable income of the taxpayer for that financial year.

For individuals, the most significant exemption is the family home. The sale of personal residential property is normally exempt from Capital Gains Tax, except for gains realized during any period in which the property was not being used as your personal residence (for example, being leased to other tenants) or portions attributable to business use.

Belgium

There is no capital gains tax in Belgium. The Kingdom of Belgium is a Country in northwest Europe. It is a founding member of the European Union and hosts its headquarters as well as those

Brazil

Capital gains tax is set at 15%.

Bulgaria

Capital gains tax is 10 % since 1st of January 2007.

Lithuania

Capital gains tax is 19 %.

Canada

Currently 50. 00% of capital gains are taxed in Canada at the general rate. Country to "Dominion of Canada" or "Canadian Federation" or anything else please read the Talk Page (ie $100 CG with 43% tax rate will attract $21. 50 of tax. ) Some exceptions apply, such as selling one's primary residence which may be exempt from taxation. ^[1]

For example, if your capital gains (profit) is $100, you're only taxed on the first 50. 00% at your marginal tax rate. For example, if you were in the top tax bracket you'd be taxed at approx 43%. Formula for this example using the top tax bracket would be as follows:

(Capital gain x 50. 00%) x marginal tax rate = capital tax gain

= ($100 x 50. 00%) x 43%

= $50 x 43%

= $21. 50

In this example your capital gains tax on $100 is $21. 50, leaving you with $78. 50.

The formula is the same for capital losses and these can be carried forward to offset capital gains.

China

Flat 10% of capital gains taxed with traded equities being exempt.

Denmark

Share dividends and realized capital gains on shares are charged 28% to individuals of gains up to DKK 45,500 (2007-level, adjusted annually), and at 43% of gains above that. As of 1 January 2008, an additional marginal rate of 45% will apply to gains above DKK 100,000 (2007-level, adjusted annually) per year. Carryforward of realized losses on shares is allowed.

Individuals' interest income from bank deposits and bonds, realized gains on property and other capital gains are taxed up to 59%, however, several exemptions occur, such as on selling one's principal private residence or on gains on selling bonds. Interest paid on loans is deductible, although in case the net capital income is negative, only approx. 33% tax credit applies.

Companies are taxed at 25%. However, for instance, realized gains on shares owned more than three years are tax exempt and only 66% of share dividends are subject to taxation. Carryforward of realized losses on shares owned less than three years is allowed.

Ecuador

Ecuador does not have capital gains tax for income gained abroad.

Estonia

There is no separate capital gains tax in Estonia. Estonia, officially the Republic of Estonia ( Eesti or Eesti Vabariik) is a Country in Northern Europe in the Baltic region All earned income from capital gains is taxed the same as regular income, the rate of which currently stands at 21% and is expected to drop to 20% by 2009.

Finland

The capital gains tax in Finland is 28% on realized capital income. Finland, officially the Republic of Finland ( is a Nordic country situated in the Fennoscandian region of northern Europe. ^[2]

France

Capital gains tax is a flat 16%, with an annual exclusion or allowance of €5600. Residents pay an additional 11. 6% 'Social Charges', non-residents are not liable to this, there is a 15 year taper relief. However, in some specific situation tax can be reduced or eliminated (such as selling one's principal private residence).

Germany

There is currently no capital gains tax after a holding period of one year for shares (if held in a private account not in a corporate account and if holding is less than 1% of the outstanding number of shares of the company) or ten years for real estate if held as private wealth (less than 3 transactions every ten years). Germany will introduce a very strict capital gains tax for shares, funds, certificates etc. from 2009 on. Real estate will still be free of capital gains tax if held for more than ten years. The German capital gains tax will be 25% plus Solidaritätszuschlag (add on tax to finance the 5 eastern states of Germany) plus church tax effectively coming to about 28%. Church tax is a Tax imposed on members of some Religious congregations in Germany, Denmark, Sweden, Finland, No deductions of cost like custodian fees, travelling to and from annual shareholder meetings, legal and tax advice, interest paid on loans to buy shares etc. will be allowed any more from 2009 on.

Hong Kong

Hong Kong has no capital gains tax. Hong Kong ( officially the Hong Kong Special Administrative Region, is a territory located on China 's south coast on the Pearl River Delta, and borders This creates a loophole in the law whereby company directors can be paid in shares and stock options. A loophole is a weakness or exception that allows a system such as a Law or Security, to be circumvented or otherwise avoided In financial markets, a share is a Unit of account for various financial instruments including Stocks Mutual funds Limited partnerships Options are financial instruments that convey the right but not the obligation to engage in a future transaction on some Underlying security, or in a Futures As no tax is due on the capital gains, such individuals are able to avoid paying large amounts of tax which would otherwise have been due on their salaries, whereas corporation tax would be due on their company profits. However, salaries tax would be due on the open market value of the shares and options granted, less any amount that the individual paid for the grant.

Hungary

Since 1st of September 2006 there is one flat tax rate (20%) on capital income. In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is This includes: selling stocks, bonds, mutual funds shares and also interests from bank deposits. Software for Fixed assets management and Stock control developed in 2004. In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest A mutual fund is a professionally managed type of collective investments that pools money from many investors and Invests it in Stocks bonds, Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance

Iceland

In Iceland there is a 10% tax on realised capital gains. Iceland, officially the Republic of Iceland ( ( Ísland or Lýðveldið Ísland (

India

As of 2008, equities are considered long term capital if the holding period is one year or more. Long term capital gains from equities are not taxed. However short term capital gain from equities held for less than one year, is taxed at 15% (Increased from 10% to 15% after Budget 2008-09) (plus surcharge and education cess). This is applicable only for transactions that attract Securities Transaction Tax (STT).

Many other capital investments (house, buildings, real estate, bank deposits) are considered long term if the holding period is 3 or more years. ^[3] Short term capital gains are taxed just as any other income and they can be negated against short term capital loss from the same business.

Entity	Short Term Capital Gains Tax	Long Term Capital Gains Tax
Individuals (resident and non-residents)	Progressive slab rates	20% with indexation, 10% without indexation (for units/zero coupon bonds)
Partnerships (resident and non-resident)	30%	20% with indexation, 10% without indexation (for units/zero coupon bonds)
Overseas financial organisations	40% (corporate), 30% (non-corporate)	10%
Foreign Institutional Investors (FIIs)	30%	10%
Other Foreign Companies	40%	20% with indexation, 10% without indexation (for units/zero coupon bonds)
Local Authority	30%	20% with indexation, 10% without indexation (for units/zero coupon bonds)
Co-operative societies (resident and non-residents)	Progressive slab rates	20% with indexation, 10% without indexation (for units/zero coupon bonds)

Ireland

There is a 20% tax on capital gains, with several exclusions and deductions (e. As commonly used, individual refers to a Person or to any specific object in a collection For partnership in cricket terminology see List of cricket terms A partnership is a type of Business entity in which partners Local governments are administrative offices that are smaller than a State. g. agricultural land, primary residence, transfers between spouses). Gains made where the asset was originally purchased before 2003 attract indexation relief (the cost of the asset can be multiplied by a published factor to reflect inflation). Costs of purchase and sale are deductible, and every person has an exempt band of €1,270 per year.

The tax rate is 23% on certain investment policies, and rises to 40% on certain offshore gains when they are not declared in time.

Tax on capital gains arising in the first nine months of the year must be paid by October 31st, and tax on capital gains arising in the last three months of the year must be paid by the following January 31st.

Italy

Capital gains are taxed at a flat 12. 5%.

Japan

In Japan, there are two options for paying tax on capital gains. The first, Withholding Tax (源泉課税, Withholding Tax^?), taxes all proceeds (regardless of profit or loss) at 1. 05%. The second method, declaring proceeds as "taxable income" (申告所得, "taxable income"^?), requires individuals to declare 26% of proceeds on their income tax statement.

Many traders in Japan use both systems, declaring profits on the Withholding Tax system and losses as taxable income, minimizing the amount of income tax paid.

Malaysia

There is no capital gains tax for equities in Malaysia. For the biogeographical region see Malesia Malaysia (məˈleɪʒə or /məˈleɪziə/ is a country that consists of thirteen states and Malaysia used to have a capital gains tax on real estate but the tax was repealed in April 2007.

Mexico

There is a capital gains tax in Mexico. The United Mexican States ( or commonly Mexico (ˈmɛksɪkoʊ () is a federal constitutional Republic in North America.

Netherlands

There is no capital gains tax in the Netherlands. The Netherlands ( Dutch:, ˈnedərlɑnt is the European part of the Kingdom of the Netherlands, which consists of the Netherlands the Netherlands

However a "theoretical capital yield" of 4% is taxed at a rate of 30%.

In other words, all property and savings (with the exception of owner-occupied dwelling, pensions, approved "green" investments and monies below a certain threshold) are taxed at 1. 2% as a substitute for capital gains tax.

Also, dividends and "proceeds (Dutch: vervreemdingswinsten) from significant stakes" (e. g. 5% or more of the ownership of a company) are taxed at 25%. So the latter can be seen as a capital gains tax.

New Zealand

New Zealand does not have a capital gains tax in most cases. New Zealand is an Island country in the south-western Pacific Ocean comprising two main landmasses (the North Island and the South Island However, certain capital gains are classified as taxable income in New Zealand and thus are subject to income tax, such as regular share trading.

Norway

The individual capital gains tax in Norway is 28%. Norway ( Norwegian: Norge ( Bokmål) or Noreg ( Nynorsk) officially the Kingdom of Norway, is a Constitutional In most cases, there is no capital gains tax on profits from sale of your principal home. There is no capital gains tax for share-based profits for companies in Norway (capital gains excluding gains from property, bonds, and interest). Personal investment companies are popular for this reason, as well as single purpose companies for property investments. See also Collective investment scheme An investment company is a company whose main business is holding securities of other companies purely for Investment A special purpose entity ( SPE) (sometimes especially in Europe " special purpose vehicle " or simply SPV) is a body corporate (usually a

Pakistan

There is currently no capital gains tax in Pakistan. However, it is anticipated that the country will levy a tax this upcoming fiscal year (2008-09). ^[4]

Poland

Since 2004 there is one flat tax rate (19%) on capital income. In a Tax system and in Economics, the tax rate describes the burden Ratio (usually expressed as a Percentage) at which a business or person is It includes: selling stocks, bonds, mutual funds shares and also interests from bank deposits. Software for Fixed assets management and Stock control developed in 2004. In Finance, a bond is a Debt security, in which the authorized issuer owes the holders a debt and is obliged to repay the principal and Interest A mutual fund is a professionally managed type of collective investments that pools money from many investors and Invests it in Stocks bonds, Interest is a fee paid on borrowed capital Assets lent include Money, Shares, Consumer goods through Hire purchase, major assets A banker or bank is a Financial institution whose primary activity is to act as a payment agent for customers and to borrow and lend money A deposit account is a current account at a Banking institution that allows money to be deposited and withdrawn by the account holder with the transactions and resulting balance

Portugal

There is a capital gains tax on sale of home and property. Any capital gain (mais-valia) arising is taxable as income. For residents this is on a sliding scale from 12-40%. However, for residents the taxable gain is reduced by 50%. Proven costs that have increased the value during the last five years can be deducted. For non-residents, the capital gain is taxed at a uniform rate of 25%. The capital gain which arises on the sale of own homes or residences, which are the elected main residence of the taxpayer or his family, is tax free if the total profit on sale is reinvested in the acquisition of another home, own residence or building plot in Portugal.

In 1986 and 1987 Portuguese corporations changed their capital structure by increasing the weight of equity capital. In accounting terms after all liabilities are paid ownership equity is the remaining interest in Assets If valuations placed on assets do not exceed liabilities This was particularly notorious on quoted companies. In these two years, the government set up a large number of tax incentives to promote equity capital and to encourage the quotation on the stock exchange. A stock exchange, share market or bourse is a Corporation or Mutual organization which provides "trading" facilities for Stock Currently, for stock held for more than twelve months the capital gain is exempt. Software for Fixed assets management and Stock control developed in 2004. The capital gain of stock held for shorter periods of time is taxable on 10%.

Russia

The capital gains tax in Russia is 9% and 13% for tax residents and 15% or 30% for non-residents. Russia (Россия Rossiya) or the Russian Federation ( Rossiyskaya Federatsiya) is a transcontinental Country extending A tax resident is any individual residing in the Russian Federation for more than 183 days in the past year.

Singapore

There is no capital gains tax in Singapore. Singapore

South Korea

Capital gains tax in South Korea is 11% for tax residents for sales of shares in small- and medium-sized companies. South Korea, officially the Republic of Korea and often referred to as Korea ( Korean: 대한민국 tɛː Rates of 22% and 33% apply in certain other situations. [1]

Sweden

The capital gains tax in Sweden is 30% on realized capital income. "Sverige" redirects here For other uses see Sweden (disambiguation and Sverige (disambiguation.

Switzerland

There is no capital gains tax in Switzerland for residents. Switzerland (English pronunciation; Schweiz Swiss German: Schwyz or Schwiiz Suisse Svizzera Svizra officially the Swiss Confederation This article deals with personal residence in a given place For other uses see Residency (disambiguation and Resident. Corporate capital gains are taxed as ordinary income. Capital gains tax is charged to individuals on the sale of property.

Thailand

There is no separate capital gains tax in Thailand. The Kingdom of Thailand (ˈtaɪlænd ราชอาณาจักรไทย, râːtɕʰa-ʔaːnaːtɕɑ̀k-tʰɑj All earned income from capital gains is taxed the same as regular income. [2] However, if individual earns capital gain from security in the Stock Exchange of Thailand, it is exempted from personal income tax.

United Kingdom

All individuals are exempt from CGT up to a specified amount of capital gains per year. For the 2007/8 tax year this "annual exemption" is £9,200.

Individuals who are resident or ordinarily resident in the United Kingdom (and trustees of various trusts) are subject to a capital gains tax, with exceptions for, for example, principal private residences, holdings in ISAs or gilts. An Individual Savings Account (ISA is a financial product available to residents in the United Kingdom. Gilts are bonds issued by the governments of the United Kingdom, South Africa, or Ireland. Every individual has an annual capital gains tax allowance: gains below the allowance are exempt from tax, and capital losses can be set against capital gains in other holdings before taxation. Individuals pay capital gains tax at their highest marginal rate of income tax (0%, 10%, 22% or 40% in the tax year 2007/8) but since 6 April 1998 have been able to claim a taper relief which reduces the amount of a gain that is subject to capital gains tax (reducing the effective rate of tax), depending on whether the asset is a "business asset" or a "non-business asset" and the length of the period of ownership. A fiscal year (or financial year, or sometimes budget year) is a period used for calculating annual ("yearly" Financial statements in Businesses Events 46 BC - Julius Caesar defeats Caecilius Metellus Scipio and Marcus Porcius Cato in the Battle of Thapsus Year 1998 ( MCMXCVIII) was a Common year starting on Thursday (link will display full 1998 Gregorian calendar) Taper relief provides up to a 75% reduction (leaving 25% taxable) in taxable gains for business assets, and 40% (leaving 60% taxable), for non-business assets, for an individual. ^[5] Taper relief replaces indexation allowance for individuals, which can still be claimed for assets held prior to 6 April 1998 from the date of purchase until that date, but will itself be abolished on 2008-04-05. Events 46 BC - Julius Caesar defeats Caecilius Metellus Scipio and Marcus Porcius Cato in the Battle of Thapsus Year 1998 ( MCMXCVIII) was a Common year starting on Thursday (link will display full 1998 Gregorian calendar) 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 456 - St Patrick returns to Ireland as a missionary bishop

A taxpayer is exempt from CGT on his/her principal private residence and on the sale of private motor vehicles. Certain other gains are allowed to be rolled over upon re-investment. Investments in some start up enterprises are also exempt from CGT.

Companies are subject to corporation tax on their "chargeable gains" (the amounts of which are calculated along the lines of capital gains tax). Throughout this article the unqualified term "pound" and the £ symbol refer to the United Kingdom pound. Companies cannot claim taper relief, but can claim an indexation allowance to offset the effect of inflation. In economics inflation or price inflation is a rise in the general level of prices of goods and services over a period of time A corporate substantial shareholdings exemption was introduced on 1 April 2002 for holdings of 10% or more of the shares in another company (30% or more for shares held by a life assurance company's long-term insurance fund). The substantial shareholdings exemption is an exemption from assessment of Capital gains under corporation tax applicable to United Kingdom Events 527 - Byzantine Emperor Justin I names his nephew Justinian I as co-ruler and successor to the throne See also 2002 (disambiguation Year 2002 ( MMII) was a Common year starting on Tuesday of the Gregorian calendar. This is effectively a form of UK participation exemption. Participation exemption is a general term relating to an exemption from Taxation for a Shareholder in a Company on Dividends received and potential Almost all of the corporation tax raised on chargeable gains is paid by life assurance companies taxed on the I minus E basis. Life insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the

The rules governing the taxation of capital gains in the United Kingdom for individuals and companies are contained in the Taxation of Chargeable Gains Act 1992. The Taxation of Chargeable Gains Act 1992 is an Act of Parliament which governs to levying of Capital gains tax in the United Kingdom

In the Chancellor's October 2007 Autumn Statement, draft proposals were announced that would change the applicable rates of CGT as of 6 April 2008. Events 46 BC - Julius Caesar defeats Caecilius Metellus Scipio and Marcus Porcius Cato in the Battle of Thapsus Under these proposals, an individual's annual exemption will continue but taper relief will cease and a single rate of capital gains tax at 18% will be applied to chargeable gains. This new single rate would replace the individual's marginal (Income Tax) rate of tax for CGT purposes. The changes were introduced, at least in part, because the UK government felt that private equity firms were making excessive profits by benefiting from overly generous taper relief on business assets. In Finance, private equity is an Asset class consisting of equity Securities in operating companies that are not Publicly traded on The changes were criticised by a number of groups including the Federation of Small Businesses, who claimed that the new rules would increase the CGT liability of small businesses and discourage entrepreneurship in the UK^[6]. The Federation of Small Businesses (FSB was formed in 1974 and is the UK's leading business organisation representing small and medium businesses At the time of the proposals there was concern that the changes would lead to a bulk selling of assets just before the start of the 2008-09 tax year to benefit from existing taper relief.

Entrepreneurs selling their business (technically "qualifying assets") can claim Entrepreneurs' Relief - a lifetime allowance of £1,000,000 of gain that will only be taxed at 10%.

United States

Main article: Capital gains tax in the United States

In the United States, individuals and corporations pay income tax on the net total of all their capital gains just as they do on other sorts of income, but the tax rate for individuals is lower on "long-term capital gains," which are gains on assets that had been held for over one year before being sold. In the United States individuals and corporations pay Income tax on the net total of all their capital gains just as they do on other sorts of income The tax rate on long-term gains was reduced in 2003 to 15%, or to 5% for individuals in the lowest two income tax brackets (See progressive tax). A progressive tax is a Tax imposed so that the Tax rate increases as the amount subject to taxation increases Short-term capital gains are taxed at a higher rate: the ordinary income tax rate. Under the United States Internal Revenue Code, the type of income is defined by its character The reduced 15% tax rate on eligible dividends and capital gains, previously scheduled to expire in 2008, has been extended through 2010 as a result of the Tax Increase Prevention and Reconciliation Act signed into law by President Bush on May 17, 2006 (P. L. 109-222). In 2011 these reduced tax rates will "sunset," or revert to the rates in effect before 2003, which were generally 20%. In Public policy, a sunset provision or sunset clause is a provision in a Statute or Regulation that terminates or repeals all or portions of

The IRS allows for individuals to defer capital gains taxes with tax planning strategies such as the Structured sale (Ensured Installment Sale), charitable trust (CRT), installment sale, private annuity trust, and a 1031 exchange. The A structured sale is a special type of Installment sale pursuant to the Internal Revenue Code. A charitable trust is a trust established for charitable purposes and is a more specific term than " charitable organisation " A private annuity trust (PAT enables the value of highly appreciated assets such as real estate collectables or an investment portfolio to be realized without directly selling them The United States is unlike other countries in that its citizens are subject to U. S. tax on their worldwide income no matter where in the world they reside. U. S. citizens therefore find it difficult to take advantage of personal tax havens. A tax haven is a place where certain Taxes are levied at a low rate or not at all Although there are some offshore bank accounts that advertise as tax havens, U. S. law requires reporting of income from those accounts and failure to do so constitutes tax evasion. Tax avoidance is the legal utilization of the Tax regime to one's own advantage in order to reduce the amount of tax that is payable by means that are within the law

Deferring or reducing capital gains tax

Capital gains tax can be deferred or reduced if a seller utilizes the proper sales method and/or deferral technique. There are many such sales techniques and methods, each of which has its benefits and drawbacks. See some ways to defer and/or reduce capital gains tax below.

(US only) Deferred Sales Trust- Allows the seller of property to defer capital gains tax due at the time of sale over a period of time.
(US only) 1031 exchange - Defer tax by exchanging for "like kind" property. Pay capital gains when it is realized.
(US only) Structured sale annuity (aka Ensured Installment Sale) - Defer and reduce capital gains tax while gaining safety and a stream of guaranteed income. A structured sale is a special type of Installment sale pursuant to the Internal Revenue Code.

Charitable trust - Defer and reduce capital gains by giving equity to a charity. A charitable trust is a trust established for charitable purposes and is a more specific term than " charitable organisation "
Installment Sale - Defer capital gains by taking payments from a buyer over a period of years. No protection from buyer default.
(US Only) [Self Directed Installment Sale (SDIS) http://www.nafep.com/sdis/self_directed_installment_sale.htm]- Allows for the deferral of capital gains taxes while removing the risks from buyer default under a traditional installment sale
(US only) (historical) Private annuity trust - No longer a valid tax deferral tool. A private annuity trust (PAT enables the value of highly appreciated assets such as real estate collectables or an investment portfolio to be realized without directly selling them

References

^ CRA. IT-120R6 Principal Residence
^ VERO Taxation of Stock Options
^ Indian Gov Capital Gains Tax Calculator
^ "Several new taxes in budget, says Dar", Dawn, 2008-05-13
^ An Introduction to Capital Gains Tax (PDF) p. 94. HM Revenue and Customs. Retrieved on 2008-04-22. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 1500 - Portuguese Navigator Pedro Álvares Cabral becomes the first European to sight Brazil.
^ Jean Eaglesham and John Willman. "Final showdown on CGT reforms", Financial Times, 2008-01-23. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 393 - Roman Emperor Theodosius I proclaims his nine year old son Honorius co-emperor Retrieved on 2008-01-23. 2008 ( MMVIII) is the current year in accordance with the Gregorian calendar, a Leap year that started on Tuesday of the Common Events 393 - Roman Emperor Theodosius I proclaims his nine year old son Honorius co-emperor

External links

The Labyrinth of Capital Gains Tax Policy: A Guide for the Perplexed (1999), Brookings Institution Press.

Deloitte Tax Country Guides

[3] Alan Reynolds, Capital Gains Tax: Analysis of Reform Options for Australia] (1999), Australian Stock Exchange.

IRS "Like Kind Exchanges Tax Tips"

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