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A capital gains tax (abbreviated: '''CGT''') is a Tax charged on Capital Gain s, the profit realized on the sale of an Asset that was purchased at a lower price. 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. TAX SYSTEMS Argentina There is no capital gains tax charged in Argentina . Australia See Also: 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 Bond s. 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. 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). Belgium There is no capital gains tax in Belgium . Brazil Capital gains tax is set at 15%. Bulgaria There is no capital gains tax in Bulgaria . Canada 50% of capital gains are taxed in Canada at the ordinary income rate. Currently there is no difference between long term and short term capital gains. Some exceptions apply, such as selling one's primary residence which may be exempt from taxation.CRA. IT-120R6 Principal Residence China Flat 20% of capital gains taxed with traded equities being exempt. Denmark Realized capital gains are taxed at 28% of gains up to 45500 kr (year 2007, adjusted each year), and at 43% of gains above. As of 1 January 2008, an additional marginal rate of 45% will be added to the current rates for capital gains above 100000 kr per year. Finland The capital gains tax in Finland is 28% on realized capital income.VERO Taxation of Stock Options France Capital gains tax is a flat 26%, with an annual exclusion of €5600. 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%. 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. This creates a Loophole in the law whereby Company Director s can be paid in Shares and Stock Options . 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, however corporation tax would be due on their company profits. Hungary Since 1st of September 2006 there is one flat s, Bond s, Mutual Funds shares and also Interest s from Bank Deposit s. Iceland In Iceland there is a 10% tax on realised capital gains. India There is currently no capital gains tax after a holding period of more than one year for equities. However, 10% of tax is applied for short term equity-shares gain. This is applicable only for transactions that attract Securities Transaction Tax (STT). As of 2006, shares / equities are considered long term capital, if the holding period is one year or more. Long term capital gains are taxed either at 10% of earnings or 30% of (earnings - deduction based on inflation index). 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. Many other capital investment ( home, buildings, real estate, bank deposits) are considered long term if the holding period is 3 or more years.Indian Gov Capital Gains Tax Calculator Ireland There is a flat 20% on capital gains, with several exclusions and deductions (e.g. agricultural land, primary residence). Italy Capital gains are taxed at a flat 12.5%. Malaysia There is no capital gains tax for equities in Malaysia . Malaysia used to have a capital gains tax on real estate but the tax was repealed in April 2007. Mexico There is no capital gains tax in Mexico . Netherlands There is no capital gains tax in the Netherlands . New Zealand New Zealand does not have a capital gains tax in most cases. 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%. 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. Poland Since 2004 there is one flat s, Bond s, Mutual Funds shares and also Interest s from Bank Deposit s. Russia The capital gains tax in Russia is 13% for tax residents and 30% for non-residents. 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 . Sweden The capital gains tax in Sweden is 30% on realized capital income. Switzerland There is no capital gains tax in Switzerland for Residents . Corporate capital gains are taxed as ordinary income. Thailand There is no separate capital gains tax in Thailand . All earned income from capital gains is taxed the same as regular income. {Link without Title} 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 2006/7 tax year this "personal exemption" is £8,800. Gordon Brown's budget of 21st March 2007 raised this to £9,200 for the 2007/8 tax year. 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 2004/5) 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. 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. A taxpayer is exempt from CGT on his/her principal private residence. Certain other gains are allowed to be rolled over upon re-investment. Investments in some start up enterprises are also exempt from CGT. The sale of a family business can be exempt from CGT upon retirement. Companies are subject to Corporation Tax on their "chargeable gains" (the amounts of which are calculated along the lines of capital gains tax). Companies cannot claim taper relief, but can claim an indexation allowance to offset the effect of Inflation . 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). This is effectively a form of UK Participation Exemption . Almost all of the corporation tax raised on chargeable gains is paid by Life Assurance companies taxed on the I Minus E Basis . 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 . United States See Also: Capital gains tax in the United States In the United States, individuals and corporations pay tax rate. 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 Reconciliation Act signed into law by President Bush on May 17, 2006. In 2011 these reduced tax rates will " Sunset ," or revert to the rates in effect before 2003, which were generally 20%. 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 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 Haven s. 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 . 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 sales techniques and methods out there, each of which have their benefits and drawbacks. See some ways to defer and/or reduce capital gains tax below.
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