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The Capital Gains Tax - Report Example

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This report "The Capital Gains Tax" focuses on the amount paid by a taxpayer for selling capital goods at profit. CGT is also defined as the tax that is charged on any gain resulting when a chargeable person makes chargeable disposal of a chargeable asset…
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The Capital Gains Tax
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Download file to see previous pages Thus, there was this gap in the taxation system as a whole and CGT was designed to fill it in.
Introduced in 1965, a Capital Gains Tax (CGT) is generally the amount paid by a taxpayer for selling capital goods (e.g., a parcel of land, a building, shares of company stocks, antiques, jewelry or an enterprise) at a profit. CGT is also levied on taxpayers who received prize money or compensation that is not covered by income tax, and those who gave away assets that are worth more than the corresponding acquisition costs. (The Times 2010)
CGT is also defined as the tax that is “charged on any gain resulting when a chargeable person makes chargeable disposal of a chargeable asset.” (Lee 2009:469) There are prevailing laws that dictate what constitutes a chargeable person, chargeable disposal and a chargeable asset. There also are similar laws that specify exemptions, reliefs and allowable deductions in computing the final amount subject to CGT. These items are first considered in the computation of taxable capital gains before the tax charges are applied. (Lee 2009:469)
For CGT purposes, chargeable persons pertain to all who are subject to it by law. They include residents of the United Kingdom, trustees, proportional representations (PRs) and partners. In cases when a partnership as a whole has concluded a transaction that is to be charged with CGT, each of the partners would be charged according to his fair share in the total.
In the case of corporations – the “artificial” beings in a country – that earned sums that would have been subject to CGT, corporation taxes are instead collected. These corporation taxes are based on corporate earnings that definitely include the chargeable gains. (Lee 2009:470) Needless to say, there is a whole set of rules governing corporation taxes – rules regarding CGT do not apply. ...Download file to see next pagesRead More
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