2023 Capital Gains Tax (CGT)

A cluster analysis of individual taxpayers - what are the characteristics of taxpayers who realise capital gains?

Published Date: 1 Jul 2023

 

The 50% CGT discount is a sizeable tax preference, introduced in 1999–2000, which has been the cause of lost tax revenue, and has compromised the important tax system design principles of horizontal equity and vertical equity. In this article, the 2019–20 2% individual taxpayer sample file and the aggregate taxpayer data from Taxation Statistics are analysed to gain some insights into the characteristics of taxpayers with capital gains. The data mining technique of cluster analysis is used to group similar taxpayers together based on selected tax return fields. The analysis confirms that the 50% CGT discount disproportionately benefifits a very small group of high income taxpayers with relatively large levels of capital gains. The abolition or reduction of the 50% CGT discount would improve the overall integrity of the tax system, as well as horizontal and vertical equity. The benefits to the overall tax system of this reform would far outweigh any disadvantages that may apply to the small proportion of taxpayers who realise capital gains.

Author Profile
James Minas

Author Profile
John Minas

Author Profile
Youngdeok Lim

Sorry, this is subscriber only content.

To gain access to this material and much more - Subscribe Now.

(Note: Members can access Taxation in Australia journal articles without a Tax Knowledge Exchange subscription - please log in to access).

Already a Subscriber? Login now

Already a Subscriber? Login now

Details

The material is copyright. Apart any fair dealing for the purpose of private study, research criticism or review, as permitted under the copyright Act, no part may be reproduced by any process without written permission from The Tax Institute.

Unless expressly stated, opinions are not that of The Tax Institute, which accepts no responsibility for the accuracy of any of the information contained within it.

The Tax Institute
(ABN 45 008 392 372 (PRV14016))

("TTI")

The Tax Institute is a Recognised Tax Agent Association (RTAA) under the Tax Agent Services Regulations 2009. 

Copyright Statement

All materials provided on this site are protected by copyright and are owned by or licensed to TTI.

Except as expressly permitted by TTI or the copyright owner, any person or company who uses this site must not use, reproduce, redistribute, retransmit, publish or otherwise transfer, or commercially exploit, the materials or any information, software or other content, in whole or in part, which is available through this site.

Tags

2023 Capital Gains Tax (CGT)

Share this page