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Capital gain |
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Capital gainThe gain in value that the owner of an asset experiences when the price of the asset rises, including when the the currency in which the asset is denominated appreciates. Contrasts with capital loss.Capital gainWhen a stock is sold for a profit, the capital gain is the difference between the net sales price of the securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss.Capital gainThe amount chargeable to capital gains tax (CGT) from gains made on the disposal of an asset. In the case of stocks and shares, your gain is the difference between the proceeds of selling the shares and the amount you paid for them adjusted for indexationIn calculating the acquisition cost, you can include including broker commissions and stamp duty. Depending on when you bought the shares, the base cost can be increased through the indexation allowance - a good thing from a tax point of view because the higher your acquisition cost, the lower your chargeable gain.In calculating the disposal proceeds, you can deduct commissions and other charges incurred in the process of selling.Whether you have to pay Capital Gains Tax on the chargeable gain will depend on whether you have already used up your annual exemption (the amount of gains you can make in any one year without paying CGT), and on the level of your other gains or losses in the tax year.Taper relief, which reduces the rate of tax you pay on gains, may also be available, depending on how long you have held the shares at the time you sell them.Similar MatchesCapital allocation decisionCapital allocation decisionAllocation of invested funds between risk-free assets and the risky portfolio. Capital gains taxCapital gains taxThe tax levied on profits from the sale of capital assets. A long-term capital gain, which is achieved once an asset is held for at least 12 months, is taxed at a maximum rate of 20% (taxpayers in 28% tax bracket) and 10% (taxpayers in 15% tax bracket). Assets held for less than 12 months are taxed at regular income tax levels, and, since January 1, 2000, assets held for at least five years are taxed at 18% and 8%. Personal tax view (of capital structure)Personal tax view (of capital structure)The argument that the difference in personal tax rates between income from debt and income from equity eliminates the disadvantage of the double taxation (corporate and personal) of income from equity. Pie model of capital structurePie model of capital structureA model of the debt-equity ratio of the firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets. Dedicated capitalDedicated capitalTotal par value (number of shares issued, multiplied by the par value of each share). Also called dedicated value. Further SuggestionsCapitalization Weighted Indexventure capital Capital turnover Capital Builder Account (CBA) Planned capital expenditure program Capital Capital movement Capital depreciation Crony capitalism Opportunity cost of capital Cost of capital Capitalization table Recapitalization proposal capital movement authorised share capital risk capital Negative working capital market capitalisation Capital flight Capital Gains capital shares Capital control paid in capital Long term capital gain Capital flow |
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