Capital gains

This is why you invest - generally you want to make a profit! A capital gain is simply the profit you make when you sell an investment that has increased in value. Even if the value of your asset goes up, you only make a profit 'on paper'. As soon as you sell your assets, you realise the gain, which is why it's called a realised capital gain.

If you sell your assets for less than you paid for them, you may make a capital loss. If your total capital losses for the year are greater than your total capital gains, then you have made a net capital loss. You should seek independent professional tax advice on how your losses and gains affect your tax liability.

There are tax implications for both capital gains and capital losses. Usually capital gains can be offset against any capital losses. Capital gains tax (CGT) only applies to the net capital gains that arise when your investments are sold. CGT is calculated at your marginal tax rate, which could be as high as 48.5% (inclusive of the Medicare levy). However, if you held your investment on capital account for more than 12 months, your CGT may be halved. That's why it's best to seek independent professional advice from your accountant or adviser before making decisions that affect your tax position.