Taxation Essay Example | Topics and Well Written Essays - 2500 words - 3

Taxation - Essay Example The Australian taxation of capital gains has been aligned with the international norms.1 A half of the capital gains that individuals realize on assets they have held for twelve months and more, the effective tax rate is half the rate charged on other forms of incomes. The different events or transactions that give rise to either a capital loss or capital gains are called capital gains tax events. A full gamut of these events exist, and some of them frequently occur and affect many individuals while others are not common and affect few individuals.2 The knowledge of the various types of capital gains tax events is imperative since it influences how an individual works out his or her capital gains or capital losses. In addition, it affects the timing of such capital losses or capital gains. In case there is the occurrence of more than one capital gains tax events, the one used is one that that is most specific to the situation.3 Therefore, among the capital gains tax events are: the destruction or loss, which may be involuntary or voluntary, of an asset; cancellation, redemption or surrender of shares; the disposal of depreciating assets that are wholly or partly used for private purposes; where an individual ceases to be a resident of Australia; w hen an entity enters into a conservation covenant; making of payments by a company to a shareholder; where financial instruments are declared to be worthless by a liquidator; where an individual makes a contract to stop working in a given sector for some agreed upon the period; where a trustee makes a non-assessable payment; compensation payment; and making payments to a business by a local council after destruction of its assets. However, it should be noted that subdivision of land does not give rise to a capital gains tax event but a sale of any of the subdivision gives rise to a capital gains tax event4. The benefits made give rise to a capital gains tax event. When capital gains are made from compensation made