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Chapter 6Capital income taxation
Contents
Summary 199
6.1 Introduction 200
6.2 Capital taxation 201
6.3 Dividend income 2026.3.1 The taxation of dividend income: classical versus shareholder relief systems 2026.3.2 Tax rates applying to dividend income 204
6.4 Capital gains 2066.4.1 Capital losses and rollover relief 209
6.5 Interest 209
6.6 Top personal tax rate measured against corporate tax rate 210
AppendicesAppendix 6.1: Integration of company and individual taxation 215Appendix 6.2: Taxation of capital gains 217
Page 199
6. CAPITAL INCOME TAXATION
SUMMARY
The capital income of individuals is taxed in many different ways around the world. In recent years, there has been a particular focus on the method of integration of the corporate and personal levels of taxation. Many European countries have tended to move away from full imputation, to systems where dividends are taxed at lower rates at the personal level.
Australia is one of only a small number of OECD-30 countries that have a dividend imputation system (where the credit depends on company tax paid). Unlike most of the other OECD countries with an imputation system, Australia’s system refunds excess imputation credits eliminating the double taxation of dividends. Most OECD countries use a credit system (where the credit does not depend on company tax paid) or have a modified classical system with a reduced rate on dividends to relieve the double taxation of dividend income.
Australia has the third lowest top overall tax rate of the OECD-10 on dividend income, taking account of tax at both the company and the shareholder level.
Australia has the second lowest overall tax rate of the OECD-10 on dividend income for an individual earning the average wage, taking account of tax at both the company and the shareholder level.
All of the OECD-10 countries, including Australia, provide some form of concessional treatment for capital gains.
Australia has the third highest top capital gains tax rate for shares held between one and two years, and the second highest top capital gains tax rate for shares held for ten years, of the OECD-10. Two countries in the OECD-10 exempt capital gains on shares (New Zealand and Switzerland) while four countries provide a capital gains allowance (Canada, Ireland, Japan and the United Kingdom).
Most countries in the OECD-10 have a lower tax rate on interest income compared with the tax rate on wage and salary income. In many cases, this is because social security contributions do not apply to capital income.
Australia has the highest top marginal personal tax rate on interest income of the OECD-10, and is around 11 percentage points above the OECD-10 average (37.1 per cent). A number of the comparator countries also provide exemptions for certain interest income.
This chapter also examines the extent of the difference between tax rates on wages and salaries and the tax rates on corporate income. Of the 30 OECD countries, only one, the Slovak Republic, has aligned its top marginal personal tax rate and full statutory corporate tax rate.
International comparison of Australia's taxes
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Australia’s difference (18.5 percentage points) is only slightly above the OECD-30 average (17.8 percentage points). Australia has the fourth highest difference across the OECD-10 and is around four percentage points above the OECD-10 average (14.9 percentage points).
6.1 INTRODUCTION
The accumulation and efficient allocation of capital is pivotal to the growth of every economy. As such, the taxation of capital income raises important issues concerning its effect on incentives to save and invest, on resource allocation, on risk taking and on entrepreneurship.
This chapter examines the taxation of domestically-sourced capital income of domestic individual taxpayers amongst the OECD-10. It considers taxes paid on:
• dividend income — including the integration of the personal and corporate tax systems;
• capital gains; and
• interest income.
Taxes on property (rent), royalties and capital deductions such as depreciation and interest expense are not covered, while the taxation of retirement savings and foreign source income are covered in Chapters 7 and 10.
Despite the importance of capital taxation, most cross-country analysis is focused on corporate taxation. Given the limited comparative information available on capital income taxes at the personal level, this chapter is largely based on OECD estimates of the top tax rate applying to the three types of capital income noted above. While this provides an interesting comparison, it has three key limitations:
• the actual tax rate faced by the investor is likely to be lower because most countries have preferential tax arrangements applying to specific types of capital income;
• the estimate ignores the taxation of lower income individuals; and
• the estimate does not represent the true tax burden faced by the investor, because the effective rate of tax may be significantly different.
Estimates of effective marginal tax rates (EMTRs) for investments are potentially more useful. EMTRs measure the tax burden faced by an individual investor as the fraction of the pre-tax rate of return on a new investment that is collected as tax. Such measures are complex and comparative studies are generally limited to investments made by companies in physical assets and exclude taxation at the shareholder level (see Chapter 5). As a result EMTRs are not presented.
This chapter also examines the extent of the difference between tax rates on wages and salaries (Chapter 4), and the tax rates on corporate income (Chapter 5).
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6.2 CAPITAL TAXATION
Capital income is taxed in many different ways around the world. Even within the OECD-10 approaches vary significantly.
The two general approaches to taxing capital income are to:
• treat capital income as ordinary income, which is taxed at personal income tax rates (similar to the approach of Australia, Canada and New Zealand); or
• separate capital income from ordinary income, and tax it at different rates — so-called schedular taxation (similar to the approach of the Netherlands, see Box 6.1).
Most countries use combinations of the two depending on the source of the capital income.
In addition to these broad differences there are also significant differences between: the calculation of taxable capital gains; systems of shareholder relief; and the treatment of capital gains (the later two are covered in detail below).
In relation to the calculation of taxable capital income, most of the OECD-10 tax realised capital income. The one exception is the Netherlands, where most taxable capital income is calculated based on a deemed rate of return on all capital producing assets held by the taxpayer (see Box 6.1).
Many countries also have tax preferred savings accounts outside of retirement savings. Tax preferred savings accounts depart from comprehensive income taxation (where deposits and earnings are taxed and withdrawals are not), with earnings exempt and withdrawals either exempt or taxed at a lower rate.
International comparison of Australia's taxes
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Box 6.1: Schedular taxation — the Netherlands’ box system Of the OECD-10, the Netherlands has the closest tax system to a pure schedular arrangement.
The Netherlands introduced its current schedular (or box) system as part of the 2001 tax reform. Under this system an individual’s income is classified into one of three boxes. The income of each box is calculated separately with a different tax rate applying to the income for each box.
• Box 1: includes wages and salaries, social security payments and pensions and income from owner-occupied dwellings (based on a deemed rental value) less allowable deductions. Net income is taxed at progressive rates ranging from 34.4 per cent to 52 per cent (including social security contributions).
• Box 2: includes capital gains and other income from substantial shareholdings. This includes dividends and capital gains where the shareholder controls at least 5 per cent of the company. Net income for substantial shareholdings is taxed at a flat rate of 25 per cent.
• Box 3: is the taxation of capital income, including income from non-substantial shareholdings. Instead of taxing realised capital income, income-producing assets of the taxpayer are deemed to produce a yield of 4 per cent, which is taxed at a flat rate of 30 per cent. This is equivalent to a 1.2 per cent wealth tax (30 per cent x 4 per cent).
The effect of this type of schedular taxation is that capital income is taxed at lower rates than wages and salaries, while income and losses cannot be transferred across boxes.
6.3 DIVIDEND INCOME
Policy interest in the taxation of dividends has increased across OECD countries in recent years. In particular, there has been a focus towards reconsidering the relative advantages and disadvantages of integrating the corporate and personal levels of taxation on distributed profits. Many European countries have tended to move away from full imputation systems to systems where dividends are taxed at lower rates at the personal level. Australia has a full imputation system.
The following section provides a brief overview of the various shareholder relief systems. This is followed by a comparison of tax rates applying to dividends across the OECD-10.
6.3.1 The taxation of dividend income: classical versus shareholder relief systems
Classical system
Under a pure classical system, companies and shareholders are treated as separate entities with profits being taxed first at the company level. The post-tax profits are then taxed at the shareholder level when distributed, resulting in full economic double taxation of the income.
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Economic efficiency considerations lie behind arguments for eliminating the double taxation of dividends, with taxation influencing at least three kinds of decisions:
• the corporate financing decision between debt and equity;
• the choice to hold or distribute profits; and
• whether or not to incorporate an enterprise (OECD 1991, p 168).
Shareholder relief systems
Shareholder relief systems aim to reduce the full economic double taxation that applies under a pure classical system. Shareholder relief systems may be implemented at either the company or shareholder level or both. Table 6.1 lists the general types of shareholder relief systems and Appendix 6.1 provides details of the shareholder relief systems and the degree of integration of company and individual taxation for the OECD-10.
Table 6.1: General types of shareholder relief systems Company level Shareholder level
Type of relief Comment Type of relief Comment
Dividend deduction Provide a full or partial deduction for distributed profits.
Dividend exclusion A proportion of dividend income is excluded from taxation.
Credit Provide a full or partial credit to the company for distributed profits.
Credit Provide a full or partial credit to the taxpayer for dividends received.
Reduced rate Reduce the tax rate for distributed profits.
Reduced rate Reduce the tax rate for dividends received.
The credit and reduced rate shareholder relief systems can be designed to eliminate fully the economic double taxation of corporate income that applies under the pure classical system. The reduced rate system can only ever partially eliminate the economic double taxation of corporate income unless the rate is reduced to zero.
Australia’s imputation system is a very pure form of credit relief at the shareholder level where the credit is related to the amount of Australian tax that has been paid at the corporate level and is fully refundable in the hands of the company’s shareholders. The Australian system almost fully removes the double taxation of domestic income of domestic shareholders.1
The Australian imputation system is relatively neutral with respect to the corporate financing decision but raises issues concerning Australian companies earning foreign source income and their shareholders, who do not obtain imputation credits for foreign corporate tax paid by a branch or subsidiary of an Australian resident company. However, Australia’s approach is consistent with the national neutrality benchmark.
1 The only double taxation that could remain for such shareholders relates to the capital gains they realise in an Australian company that held undistributed profits that had been subject to Australian tax. If the market price of the shares reflected the company’s franking account balance all double taxation would be eliminated. To the extent that the market price did not reflect the franking account balance then some double taxation could remain. This aspect of double taxation on retained corporate income is common with most other shareholder relief systems.
International comparison of Australia's taxes
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Other forms of credit and shareholder relief systems provide relief regardless of whether home country tax has been paid. This reduces or eliminates the non-neutrality between domestic and foreign source income for domestic companies and their shareholders.
6.3.2 Tax rates applying to dividend income
Chart 6.1 illustrates the top overall statutory tax rates on distributions of domestic source income to a resident individual shareholder, including corporate income tax, personal income tax and any type of integration or relief to reduce the effects of double taxation. The chart shows that Australia’s top overall tax rate on dividends sourced from domestic profits (48.5 per cent) is the third lowest of the OECD-10 and is around three percentage points below the average (51.2 per cent) of those countries.
The top overall tax rate on dividends is equal to the top marginal personal tax rate on labour income in Australia, the Netherlands and New Zealand. 2 For Australia and New Zealand, this highlights the use of a full imputation system (where the credit depends on company tax paid), while for the Netherlands it is a feature of their schedular taxation arrangement. For the remaining countries, the top overall tax rate on dividends is greater than the top marginal personal tax rate, which primarily reflects their integration systems only providing partial relief of the double taxation of dividend income.
2 The top marginal personal tax rate is the all-in top marginal tax rate as calculated by the OECD. The all-in top marginal tax rate includes national and sub-national government personal income tax, plus employee social security contributions (as well as the impact of deductibility of social security contributions from national government taxes), resulting from a unit increase in gross wages.
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Chart 6.1: Top overall statutory tax rates on domestic source dividend income(a)
OECD-10, 2005
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(a) Overall statutory tax rates on distributions of domestic source income to a resident individual shareholder, incorporating
corporate income tax, personal income tax and any type of shareholder relief. (b) The corporate income tax rate includes the church tax, while the personal income tax rates excludes it. (c) Canada recently announced a reduction in personal income taxes on eligible dividends.
See http://www.fin.gc.ca/news05/data/05-082_1e.html for further details. (d) The 2005 rate for Japan was not available; the 2004 rate is presented. Source: OECD Tax Database. Chart 6.2 illustrates the overall statutory tax rates on distributions of domestic source income to a resident individual shareholder earning the average wage, including corporate income tax, personal income tax and any type of integration or relief to reduce the effects of double taxation.3 The chart shows that Australia’s overall tax rate on dividend income for an individual on the average wage (31.5 per cent) is the second lowest of the OECD-10 and is around 10 percentage points below the average (41.9 per cent) of those countries.
3 For Australia, the average wage is $51,169.
International comparison of Australia's taxes
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Chart 6.2: Overall statutory tax rates on domestic source dividend income — average production worker(a)
OECD-10, 2005
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(a) Overall statutory tax rates on distributions of domestic source income to a resident individual shareholder, incorporating
corporate income tax, personal income tax and any type of shareholder relief. OECD estimates for Japan, Spain and Switzerland were not confirmed by the responsible agency in each country.
(b) The corporate income tax rate includes the church tax, while the personal income tax rate excludes it. (c) Canada recently announced a reduction in personal income taxes on eligible dividends. See http://www.fin.gc.ca/news05/data/05-082_1e.html for further details. Source: OECD estimates (unpublished).
6.4 CAPITAL GAINS
Typically capital gains are taxed on a realisation basis rather than an accruals basis. This introduces a deferral tax advantage to the asset holder but, depending on the particular system of capital gains tax (CGT), the asset holder may be taxed on nominal rather than real capital gains on sale of the asset.
Capital gains are taxed in many different ways around the world. New Zealand does not impose CGT and of those that have a CGT regime some have a stepped rate (as the holding period increases the tax rate decreases), some have a flat rate and others (such as Australia and Canada) use a discount system for taxing capital gains (only a proportion of the gain is taxable).
Although New Zealand does not have a general CGT regime, it has redrawn the boundary between revenue and capital to ensure that particular types of short-term gains are classified as normal operating taxable income (Desai 2006, p 1083). Examples of this include gains on the sale of personal property if the taxpayer is a trader in such property; gains from the disposal of land where the intention at the time of purchase was to sell it; and gains on domestic corporate bonds that are accruals taxed (OECD 2004, p 6).
Chart 6.3 provides either the top marginal tax rate or the flat rate, whichever is applicable on capital gains derived by the sale of shares. In the first scenario (short-term) the shares have been held for more than one year but less than two years before sale; while in the second
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scenario (long-term) the shares have been held for ten years before sale. The tax rates are nominal not effective.
For the short-term holding period, Australia’s top marginal tax rate (24.3 per cent) is the third highest of the OECD-10 while for the long-term holding period Australia’s rate (24.3 per cent) is the second highest. The comparator country average for the short-term holding period is 17.8 per cent, while the corresponding figure for the long-term holding period is 16.2 per cent. These averages are low because two of the OECD-10 (New Zealand and Switzerland) do not tax capital gains on the sale of particular forms of shares.
Chart 6.3: Top marginal tax rate on capital gains on shares(a) OECD-10, 2005-06
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(a) Where relevant based on top marginal income tax rates, short-term holdings are greater than one year but less than
two years, long-term holdings are where the shares have been held for 10 years. (b) The rate includes federal, state and city taxes with the last two being based on Michigan and Detroit. (c) Cumulative life-time capital gains exemption (C$500,000) under certain conditions. Rate includes national and sub-national
taxes, the latter being based on the representative Province of Ontario. (d) For substantial shareholders (direct or indirect ownership of more than 5 per cent); otherwise exempt. Source: various, see Chapter 1 (1.4.1). Some OECD-10 countries provide a capital gains allowance: Canada has a cumulative lifetime capital gains allowance; Ireland and the United Kingdom provide a yearly capital gains allowance; and Japan offers a capital gains allowance depending on the type of asset.
Switzerland does not tax capital gains on shares and the Netherlands only does so for gains on substantial shareholdings (greater than five per cent ownership).
Table 6.2 provides the same comparison for the OECD-30. The results should be treated with care as they only present the capital gains tax treatment on shares and not the taxation of dividends. It shows that for the short-term holding period, Australia’s marginal tax rate (24.3 per cent) is the eight highest of the OECD-30 while for the long-term holding period Australia’s rate (24.3 per cent) is the seventh highest. The OECD-30 average for the short-term holding period is 15.2 per cent, while the corresponding figure for the long-term holding period is 14.0 per cent. These averages are low because ten of the OECD-30 exempt from taxation capital gains on the sale of particular forms of shares and, as noted earlier, New Zealand does not have a general CGT system.
International comparison of Australia's taxes
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Of the OECD-30, only two countries (Denmark and the United Kingdom), have a reduced rate for gains on assets held for 10 years compared with assets held for between two to three years. However, the top long-term rate in Australia is significantly lower than the rate applying in Denmark (43.0 per cent) and is only slightly above the rate applying in the United Kingdom (24.0 per cent).
Table 6.2: Top marginal tax rate on capital gains on shares — OECD-30, 2005-06(a)
Country MTR (held more than one year but less than
two years) MTR (held more than 10 years) Australia 24.3 24.3
Austria 0.0 0.0
Belgium 0.0 0.0
Canada(b) 23.2 23.2
Czech Republic 0.0 0.0
Denmark 62.9 43.0
Finland(c) 29.0 29.0
France(d) 27.0 27.0
Germany 0.0 0.0
Greece 0.0 0.0
Hungary 20.0 20.0
Iceland 10.0 10.0
Ireland 20.0 20.0
Italy(e) 12.5 12.5
Japan 10.0 10.0
Korea(f) 20.0 20.0
Luxembourg 0.0 0.0
Mexico(g) 0.0 0.0
Netherlands(h) 25.0 25.0
New Zealand 0.0 0.0
Norway 28.0 28.0
Poland 19.0 19.0
Portugal 0.0 0.0
Slovak Republic 19.0 19.0
Spain 15.0 15.0
Sweden 30.0 30.0
Switzerland 0.0 0.0
Turkey 0.0 0.0
United Kingdom 40.0 24.0
United States(i) 20.3 20.3
Average 15.2 14.0 (a) Where relevant based on top marginal income tax rates. (b) Cumulative life-time capital gains exemption (C$500,000) under certain conditions. Rate includes federal and provincial
taxes, the latter being based on the representative Province of Ontario. (c) The taxpayer may use a maximum presumed acquisition cost of 20 per cent (50 per cent for assets held for 10 years or
longer) of the sale price. (d) There are special exemptions for gains on an interest in a qualifying ‘innovative new company’. (e) Qualified/substantial shareholding in listed company; 40 per cent inclusion in ‘other income’ taxed at marginal personal
income tax rates. (f) For substantial shareholding of quoted shares and non-substantial holding of unquoted shares. (g) For quoted shares. (h) For substantial shareholders (direct or indirect ownership of more than 5 per cent); otherwise exempt. (i) The rate includes federal, state and city taxes with the last two being based on Michigan and Detroit. Source: various, see Chapter 1 (1.4.1).
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6.4.1 Capital losses and rollover relief
Most of the OECD-10 provide carry forward of capital losses and several allow carry back of capital losses, although in most cases with restrictions (Canada, Ireland, the Netherlands and the United Kingdom). Several countries also allow capital losses to be set off against ordinary income (Canada, the Netherlands, Spain and the United States) but typically only in certain circumstances. Japan allows capital losses to be set off against total income over the next three years but only on the sale of residential property with some restrictions.
Most OECD-10 countries (except Japan and the United States) provide an exemption/rollover (sometimes subject to conditions) from CGT for a capital gain derived from the sale of a principal residence. The United States only taxes gains above US$250,000 (individual taxpayer) and offers deductions for home mortgage interest subject to particular limits.
More generally, all the OECD-10 provide replacement asset and same asset rollover with the exception of Spain, which only provides the former, and New Zealand, which does not have a CGT regime.
Appendix 6.2 provides more detailed information on the taxation of capital gains in the OECD-10 countries.
6.5 INTEREST
Over half of the OECD-10 treat interest income as ordinary personal income for taxation purposes, namely: Australia, Canada, New Zealand, Spain, Switzerland, the United Kingdom and the United States.4 Japan and Ireland impose final withholding taxes on interest at source while the Netherlands, which uses a schedular tax system, taxes an imputed return on deposits.
Chart 6.4 shows that Australia’s top overall tax rate on interest income from ordinary bank accounts (48.5 per cent) is the highest of the OECD-10 and is around 11 percentage points above the average (37.1 per cent) of the OECD-10.
Many countries in the OECD-10 have a lower tax rate on interest income compared to the personal tax rate on wages and salaries (the exceptions are for example, Australia and New Zealand). This generally arises because social security contributions apply to wage and salary income and not to capital income. For the Netherlands a lower tax rate on capital income is a key feature of their schedular approach to taxation (see Box 6.1), while as noted above Ireland and Japan use a final withholding tax arrangement for interest.
4 In the United Kingdom ‘income from savings, including interest arising to a UK-resident individual on an account with a UK bank or building society is normally paid with tax deducted at the lower rate of tax. Basic rate taxpayers do not have to pay additional tax, but higher rates of tax are assessed if applicable on the gross interest’ (CCH Tax Handbook 2005-06, pp 9,011).
International comparison of Australia's taxes
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Chart 6.4: Top marginal tax rate on interest from ordinary bank accounts OECD-10, 2005
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(a) Japan provides an exemption for interest accrued from current bank deposits, however interest from other deposits is
taxable. Source: various, see Chapter 1 (1.4.1). Many of the OECD-10 countries provide exemptions for different types of interest income. For example, the United States provides an exemption for interest earned on bonds issued by US states and municipalities for qualified purposes; Ireland provides an exemption for interest earned on savings certificates issued by the Minister for Finance; the United Kingdom provides an exemption for interest earned in certain qualified savings accounts; and Japan provides an exemption for interest accrued from current bank deposits.
6.6 TOP PERSONAL TAX RATE MEASURED AGAINST CORPORATE TAX RATE
Chart 6.5 illustrates the top marginal personal tax rate for the OECD-10 against the corporate tax rate. None of the OECD-10 have aligned their top marginal personal tax rate with the full statutory corporate tax rate, and all have their top marginal personal tax rate above the full statutory corporate tax rate.
It is important to remember that this is purely a comparison of the marginal tax rate. It is difficult to compare the tax burden as the two systems differ markedly in their tax base and credit system. Further, different rates can apply to corporate income depending on the size of the company and the industry in which it operates.
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Chart 6.5: Top marginal personal tax rate and full statutory corporate tax rate OECD-10, 2005
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Source: OECD Tax Database (preliminary data); KPMG (various); Deloitte (2006); various country websites. Chart 6.6 shows the difference between the top marginal personal tax rate and the full statutory corporate tax rate for the OECD-10. Australia has the fourth largest difference (18.5 percentage points) and is around four percentage points above the average (14.9 percentage points) of the OECD-10. The United States has the smallest difference (3.4 percentage points), while Ireland has the largest difference (35.5 percentage points), (see Box 11.1).
Chart 6.6: Difference between top marginal personal tax rate and full statutory corporate tax rate
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Source: OECD Tax Database (preliminary data); KPMG (various); Deloitte (2006); various country websites. Chart 6.7 illustrates the top marginal personal tax rate for the OECD-30 against the full statutory corporate tax rate.
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Of the 30 OECD countries only one, the Slovak Republic, has aligned its top marginal personal tax rate and full statutory corporate tax rate, although Norway, which has adopted a schedular taxation arrangement, has aligned its corporate tax rate with the tax rate on personal capital income. With the exception of the Slovak Republic, all OECD countries have their top marginal personal tax rate above the full statutory corporate tax rate.
Chart 6.7: Top marginal personal tax rate and full statutory corporate tax rate
OECD-30, 2005
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Source: OECD Tax Database (preliminary data); KPMG (various); Deloitte (2006); various country websites. As shown in Chart 6.8 the average difference between the top marginal tax rate and the corporate tax rate across the OECD-30 is 17.8 percentage points, only slightly below that of Australia (18.5 per cent).
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Chart 6.8: Difference between top marginal personal tax rate and full statutory corporate tax rate
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Source: OECD Tax Database (preliminary data); KPMG (various); Deloitte (2006); various country websites.
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REFERENCES
Deloitte Touche Tohmatsu 2006, ‘Corporate Tax Rates at a Glance,’ January 2006 (http://www.deloitte.com/dtt/cda/doc/content/2006_01_23%20Worldwide_CT_Rates_2006%281%29.pdf).
Desai, M.A. 2006, ‘Taxing Corporate Capital Gains’, Tax Notes, 6 March 2006, pp 1079-1092.
KPMG, various years, KPMG’s Corporate Tax Rates Survey, (http:/www.kpmg.com.om/PDF/212792%20Global%20Tax%20Rate_fin.pdf).
OECD 1991, Taxing Profits in a Global Economy: Domestic and International Issues, OECD, Paris.
OECD 2004, (CTPA/CFA/WP2(2004)25/REV2) Taxation of capital gains of individuals — Policy considerations and approaches in OECD countries (draft).
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APP
END
IX 6
.1: I
NTE
GR
ATI
ON
OF
CO
MPA
NY
AN
D IN
DIV
IDU
AL
TAXA
TIO
N
App
endi
x ta
ble
6.1.
1: In
tegr
atio
n of
com
pany
and
indi
vidu
al ta
xatio
n —
OEC
D-1
0 C
ount
ry
Trea
tmen
t of d
omes
tic ta
x pa
id b
y co
mpa
ny, a
t co
mpa
ny le
vel
Trea
tmen
t at i
ndiv
idua
l res
iden
t sha
reho
lder
leve
l
Aus
tralia
(F
ull c
redi
t sy
stem
)
Unf
rank
ed d
ivid
ends
pai
d ou
t of f
orei
gn s
ourc
e in
com
e ca
nnot
ge
nera
lly b
e fra
nked
, whi
ch m
eans
that
impu
tatio
n cr
edits
can
not
be a
ttach
ed to
the
divi
dend
s to
effe
ctiv
ely
offs
et ta
x pa
yabl
e.
At t
he d
omes
tic le
vel,
how
ever
, fra
nked
div
iden
ds a
re g
ross
ed u
p an
d ca
rry
impu
tatio
n cr
edits
. The
refo
re, c
urre
ntly
, the
re is
a
disi
ncen
tive
to in
vest
offs
hore
thro
ugh
Aus
tralia
n co
mpa
nies
.
Unf
rank
ed d
ivid
ends
pai
d ou
t of f
orei
gn s
ourc
e in
com
e ca
nnot
gen
eral
ly b
e fra
nked
, whi
ch m
eans
that
im
puta
tion
cred
its c
anno
t be
atta
ched
to th
e di
vide
nds
to e
ffect
ivel
y of
fset
tax
paya
ble.
A
t the
dom
estic
leve
l, ho
wev
er, f
rank
ed d
ivid
ends
are
gro
ssed
up
and
carr
y im
puta
tion
cred
its.
Ther
efor
e, c
urre
ntly
, the
re is
a d
isin
cent
ive
to in
vest
offs
hore
thro
ugh
Aus
tralia
n co
mpa
nies
.
Can
ada
(Cre
dit s
yste
m)
Ther
e is
no
spec
ific
atta
chin
g or
trac
king
of c
redi
ts. C
redi
ts a
t sh
areh
olde
r lev
el a
re in
tend
ed to
app
roxi
mat
e ta
x th
at a
rises
at
the
com
pany
leve
l.
Div
iden
ds re
ceiv
ed fr
om ta
xabl
e C
anad
ian
com
pani
es a
re g
ross
ed u
p by
25
per c
ent o
f the
div
iden
d an
d a
cred
it is
then
giv
en fo
r tw
o-th
irds
of th
e gr
osse
d up
am
ount
(or 1
3.33
per
cen
t of t
he g
ross
taxa
ble
divi
dend
). Th
is is
inte
nded
to a
ppro
xim
ate
the
amou
nt o
f tax
pre
viou
sly
paid
by
the
dist
ribut
ing
com
pany
. N
o re
fund
or c
arry
-forw
ard
of c
redi
ts is
ava
ilabl
e. D
ivid
ends
from
the
accu
mul
ated
tax
free
porti
on o
f ca
pita
l gai
ns m
ay b
e di
strib
uted
tax
free.
Thi
s at
tem
pts
to m
aint
ain
the
tax
bene
fit th
at w
ould
be
avai
labl
e on
a d
irect
inve
stm
ent.
Irela
nd
(Cla
ssic
al s
yste
m)
Div
iden
ds a
re e
xem
pt fr
om ta
x in
the
hand
s of
the
reci
pien
t. Th
ere
is n
eith
er a
with
hold
ing
tax
nor a
cre
dit s
yste
m.
No
capi
tal g
ains
on
indi
vidu
al le
vel.
Div
iden
d w
ithho
ldin
g ta
x of
20
per c
ent a
pplie
s, s
ubje
ct to
a b
road
rang
e of
exe
mpt
ions
.
Japa
n (C
lass
ical
/redu
ced
rate
)
Div
iden
ds re
ceiv
ed fr
om c
onso
lidat
ed (w
holly
-ow
ned)
su
bsid
iarie
s or
affi
liate
d co
rpor
atio
ns a
re e
ffect
ivel
y of
fset
by
a ‘d
ivid
ends
rece
ived
’ ded
uctio
n eq
uiva
lent
to 1
00 p
er c
ent o
f the
di
vide
nds
rece
ived
. A
ded
uctio
n fo
r onl
y 50
per
cen
t of t
he d
ivid
ends
rece
ived
is
avai
labl
e w
hen
divi
dend
s ar
e re
ceiv
ed fr
om n
on-a
ffilia
ted
corp
orat
ions
. Th
e di
vide
nds
rece
ived
ded
uctio
n is
redu
ced
for i
nter
est
expe
nses
attr
ibut
able
to th
e ac
quis
ition
and
hol
ding
of s
hare
s,
othe
r tha
n sh
ares
in c
onso
lidat
ed s
ubsi
diar
ies.
In e
ffect
, int
eres
t ex
pens
es a
ttrib
utab
le to
the
acqu
isiti
on a
nd h
oldi
ng o
f sha
res
are
not d
educ
tible
for c
orpo
rate
inco
me
tax
purp
oses
.
Gen
eral
ly, d
ivid
ends
from
Jap
anes
e co
rpor
atio
ns a
re s
ubje
ct to
Jap
anes
e w
ithho
ldin
g ta
x of
20
per c
ent.
H
owev
er, t
he w
ithho
ldin
g ta
x ra
te a
pplie
d to
div
iden
ds fr
om li
sted
Jap
anes
e co
rpor
atio
ns p
aid
by a
Ja
pane
se p
ayin
g ag
ent (
secu
ritie
s co
mpa
ny o
r tru
stee
com
pany
in J
apan
) is
curr
ently
redu
ced
to
10 p
er c
ent (
the
rate
of 1
0 pe
r cen
t is
appl
icab
le fo
r div
iden
ds p
aid
until
31
Mar
ch 2
008)
. Fo
r div
iden
ds p
aid
on o
r afte
r 1 A
pril
2008
, the
rate
of 2
0 pe
r cen
t (in
clud
ing
loca
l tax
) wou
ld b
e ap
plie
d w
here
the
reci
pien
t is
an in
divi
dual
who
doe
s no
t ow
n 5
per c
ent o
r mor
e of
the
issu
ed s
hare
s of
suc
h a
liste
d Ja
pane
se c
orpo
ratio
n.
Div
iden
ds fr
om u
nlis
ted
shar
es a
nd d
ivid
ends
for s
hare
hold
ers
who
ow
n 5
per c
ent o
r mor
e of
list
ed
shar
es a
re in
clud
ed in
taxa
ble
inco
me
and
taxe
d at
pro
gres
sive
rate
s (m
axim
um o
f 50
per c
ent i
nclu
ding
lo
cal t
ax).
In
suc
h ca
ses,
with
hold
ing
taxe
s as
sess
ed o
n di
vide
nds
are
cred
itabl
e ag
ains
t inc
ome
tax
liabi
litie
s.
In a
dditi
on, t
axpa
yers
may
cre
dit 1
2.8
per c
ent (
incl
udin
g lo
cal t
ax) o
n th
e fir
st ¥
10 m
illio
n of
div
iden
ds
rece
ived
and
6.4
per
cen
t (in
clud
ing
loca
l tax
) on
any
exce
ss a
s a
spec
ial d
ivid
end
cred
it.
Inte
rest
on
borr
owin
gs fo
r the
acq
uisi
tion
of s
hare
s on
whi
ch d
ivid
ends
wer
e pa
id m
ay b
e de
duct
ed fr
om
the
gros
s am
ount
of d
ivid
ends
.
International comparison of Australia’s taxes
Page 216
App
endi
x ta
ble
6.1.
1: In
tegr
atio
n of
com
pany
and
indi
vidu
al ta
xatio
n —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of d
omes
tic ta
x pa
id b
y co
mpa
ny, a
t co
mpa
ny le
vel
Trea
tmen
t at i
ndiv
idua
l res
iden
t sha
reho
lder
leve
l
Net
herla
nds
(Cla
ssic
al/im
pute
d ra
te)
Div
iden
ds d
istri
bute
d to
resi
dent
sha
reho
lder
s ar
e su
bjec
t to
a w
ithho
ldin
g ta
x of
25
per c
ent (
or e
xem
pt if
par
ticip
atio
n ex
empt
ion
appl
ies)
.
Div
iden
ds fu
lly ta
xabl
e to
resi
dent
indi
vidu
al s
hare
hold
ers
at p
rogr
essi
ve ta
x ra
tes
up to
52
per c
ent,
whe
n th
e sh
areh
oldi
ng b
elon
gs to
the
ente
rpris
e of
the
indi
vidu
al.
A fl
at ta
x ra
te o
f 25
per c
ent a
pplie
s if
the
indi
vidu
al o
wns
a s
ubst
antia
l int
eres
t (5
per c
ent o
r mor
e) in
th
e di
strib
utin
g co
mpa
ny.
An
annu
al n
et ra
te o
f 1.2
per
cen
t on
the
valu
e of
the
shar
es, w
here
app
licab
le re
late
d de
bt(s
) may
be
offs
et a
gain
st th
e va
lue,
app
lies
if th
e sh
ares
hel
d by
the
indi
vidu
al re
side
nt a
re c
hara
cter
ised
as
regu
lar
pers
onal
ass
ets
and
not a
s bu
sine
ss a
sset
s or
par
t of a
sub
stan
tial i
nter
est.
This
impu
ted
retu
rn m
etho
d ap
plie
s irr
espe
ctiv
e of
the
inco
me
real
ised
on
the
shar
es.
With
hold
ing
tax
levi
ed o
n di
strib
utio
ns is
cre
dita
ble
agai
nst t
ax p
ayab
le. E
xces
s w
ithho
ldin
g ta
x is
re
fund
able
.
New
Zea
land
(C
redi
t sys
tem
) In
bro
ad te
rms,
impu
tatio
n cr
edits
aris
e fo
r com
pany
tax
paid
and
fo
r im
puta
tion
cred
its a
ttach
ed to
div
iden
ds re
ceiv
ed b
y th
e co
mpa
ny (s
uch
as s
tand
ard
impu
tatio
n cr
edits
and
cre
dits
for
fore
ign
divi
dend
with
hold
ing
whi
ch is
pay
able
at t
he ti
me
a fo
reig
n so
urce
div
iden
d is
rece
ived
). A
‘top
up’
with
hold
ing
tax
is le
vied
if d
ivid
ends
pai
d to
resi
dent
in
divi
dual
s ar
e no
t ful
ly im
pute
d.
Taxa
ble
divi
dend
s ar
e gr
osse
d up
to in
clud
e cr
edits
atta
ched
. Cre
dits
may
be
used
to o
ffset
the
taxp
ayer
’s ta
x lia
bilit
y.
Exc
ess
impu
tatio
n cr
edits
are
non
-ref
unda
ble
and
are
carr
ied
forw
ard
by in
divi
dual
sha
reho
lder
s an
d co
nver
ted
to lo
sses
in th
e ca
se o
f tru
stee
or c
orpo
rate
sha
reho
lder
s.
Oth
er c
redi
ts (f
or e
xam
ple
in re
spec
t of f
orei
gn d
ivid
end
with
hold
ing
tax)
and
the
‘top
up’ w
ithho
ldin
g ta
x ar
e re
fund
able
.
Spa
in
(Cre
dit s
yste
m)
Whe
n a
com
pany
’s in
com
e in
clud
es d
ivid
ends
from
Spa
nish
re
side
nt c
ompa
nies
, 50
per c
ent w
ill b
e de
duct
ed fr
om th
e gr
oss
tax
due
corr
espo
ndin
g to
the
divi
dend
s. T
he ta
x cr
edit
is
100
per c
ent w
hen
the
divi
dend
s co
me
from
ent
ities
in w
hich
the
inte
rest
is a
t lea
st 5
per
cen
t ow
ned
unin
terr
upte
dly
in th
e ye
ar
prio
r to
the
dist
ribut
ion
date
. W
ithho
ldin
g on
div
iden
ds a
pplie
d w
hen
the
tax
cred
it is
50
per
cen
t. N
o w
ithho
ldin
g w
hen
the
tax
cred
it is
100
per
cen
t.
Div
iden
ds to
resi
dent
indi
vidu
al s
hare
hold
ers
are
taxa
ble,
dep
endi
ng o
n th
e ta
x ra
te o
f the
per
sona
l ci
rcum
stan
ces
of th
e sh
areh
olde
r.
Sw
itzer
land
(C
lass
ical
/redu
ced
rate
)
Ther
e is
no
inte
grat
ion
relie
f with
rega
rd to
dom
estic
tax
paid
at
com
pany
leve
l. B
asic
ally
, div
iden
ds re
ceiv
ed a
re ta
xabl
e as
ord
inar
y in
com
e. S
ome
cant
ons
such
as
App
enze
ll In
nerr
hode
n, O
bwal
den,
Nid
wal
den,
Luc
erne
and
Sch
affh
ause
n pr
ovid
e a
redu
ced
tax
rate
for i
ncom
e de
rivin
g fro
m a
sub
stan
tial p
artic
ipat
ion
in a
resi
dent
com
pany
.
Uni
ted
Kin
gdom
(C
redi
t) U
nite
d K
ingd
om re
side
nt c
ompa
nies
pay
cor
pora
tion
tax
by
refe
renc
e to
thei
r cor
pora
tion
tax
self-
asse
ssm
ent t
ax re
turn
s.
Larg
e co
mpa
nies
are
requ
ired
to p
ay c
orpo
ratio
n ta
x by
mea
ns
of q
uarte
rly in
stal
men
ts w
here
the
first
inst
alm
ent i
s du
e 6
mon
ths
and
13 d
ays
afte
r the
sta
rt of
the
acco
untin
g pe
riod.
S
mal
ler c
ompa
nies
pay
tax
9 m
onth
s an
d 1
day
afte
r the
end
of
the
rele
vant
acc
ount
ing
perio
d.
Div
iden
ds p
aid
by th
e U
nite
d K
ingd
om re
side
nt c
ompa
nies
are
pai
d w
ith a
10
per c
ent n
on-r
efun
dabl
e ta
x cr
edit.
No
with
hold
ing
tax
appl
ies
to d
ivid
ends
pai
d fro
m a
Uni
ted
Kin
gdom
tax
resi
dent
com
pany
. Th
e U
nite
d K
ingd
om ta
x re
side
nt in
divi
dual
sha
reho
lder
is th
en ta
xed
on th
e gr
osse
d up
div
iden
d (b
eing
th
e di
vide
nd re
ceiv
ed m
ultip
lied
by 1
00 o
ver 9
0) a
t eith
er 3
2.5
per c
ent (
less
the
10 p
er c
ent n
otio
nal t
ax
cred
it, g
ivin
g an
effe
ctiv
e ra
te o
f 25
per c
ent)
or 1
0 pe
r cen
t (le
ss th
e 10
per
cen
t not
iona
l cre
dit,
resu
lting
in n
o fu
rther
liab
ility
) dep
endi
ng o
n th
e in
divi
dual
’s le
vel o
f tot
al in
com
e.
Uni
ted
Sta
tes
(Red
uced
rate
) N
o cr
edits
for t
ax p
aid
at th
e co
mpa
ny le
vel c
an b
e im
pute
d to
sh
areh
olde
rs. N
o do
mes
tic w
ithho
ldin
g ta
x on
div
iden
ds p
aid.
Q
ualif
ying
div
iden
ds ta
xed
at th
e sa
me
rate
as
long
-term
cap
ital g
ains
(cur
rent
ly 1
5 pe
r cen
t — s
ee
note
). O
ther
div
iden
ds fu
lly ta
xabl
e to
resi
dent
indi
vidu
al s
hare
hold
ers
at m
argi
nal r
ates
. N
ote:
Und
er c
urre
nt la
w, t
he p
refe
rent
ial r
ate
of q
ualif
ying
div
iden
ds e
nds
for y
ears
beg
inni
ng in
200
9.
Sou
rce:
var
ious
, see
Cha
pter
1 (1
.4.1
).
Page 217
Chapter 6: Capital income taxation
APP
END
IX 6
.2: T
AXA
TIO
N O
F C
API
TAL
GA
INS
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f A
ustra
lia
Per
sona
l inc
ome
tax
Sep
arat
e ta
xatio
n N
o ca
pita
l gai
ns a
llow
ance
Shar
es
For s
hare
s he
ld le
ss th
an o
ne y
ear c
apita
l gai
n is
incl
uded
in
asse
ssab
le in
com
e, a
nd fo
r sha
res
held
mor
e th
an o
ne y
ear a
di
scou
nted
cap
ital g
ain
(50
per c
ent)
is in
clud
ed. T
axed
at m
argi
nal t
ax
rate
. C
orpo
rate
bon
ds
Sam
e tre
atm
ent a
s sh
ares
. Pr
inci
pal r
esid
ence
E
xem
pt (p
artia
l cap
ital g
ains
incl
usio
n to
the
exte
nt u
sed
for b
usin
ess
or
rent
). B
usin
ess
asse
ts
Non
-dep
reci
able
ass
ets
held
gre
ater
than
one
yea
r rec
eive
a
50 p
er c
ent d
isco
unt a
nd a
re in
clud
ed in
ass
essa
ble
inco
me.
Th
ere
are
also
four
sm
all b
usin
ess
conc
essi
ons:
tota
l exe
mpt
ion
for
gain
s on
sm
all b
usin
ess
asse
ts h
eld
for a
t lea
st 1
5 ye
ars
if ta
xpay
er is
at
leas
t 55
year
s ol
d an
d re
tirin
g, o
r per
man
ently
inca
paci
tate
d; th
e 50
per
cen
t act
ive
asse
t red
uctio
n w
hich
pro
vide
s a
50 p
er c
ent
redu
ctio
n of
a c
apita
l gai
n; re
tirem
ent e
xem
ptio
n (A
$500
,000
life
time
limit)
ava
ilabl
e fo
r gai
ns o
n sm
all b
usin
ess
asse
ts; s
mal
l bus
ines
s ro
llove
r whi
ch p
rovi
des
a de
ferr
al o
f a c
apita
l gai
n if
a re
plac
emen
t as
set i
s ac
quire
d.
Dep
reci
able
ass
ets
are
incl
uded
in b
usin
ess
inco
me
and
taxe
d at
m
argi
nal (
pers
onal
) rat
es. G
ains
or l
osse
s re
sulti
ng fr
om th
e sa
le o
f su
ch a
sset
s (d
epre
ciat
ion
reca
ptur
e) a
re ta
xed
at m
argi
nal (
pers
onal
) ra
tes.
B
uild
ing
depr
ecia
tion
is th
e ex
cept
ion
to th
e ab
ove
reca
ptur
e an
d re
duce
s th
e co
st b
ase
of th
e la
nd/b
uild
ing
with
the
subs
eque
nt g
ain
or
loss
on
disp
osal
trea
ted
as a
cap
ital g
ain
or c
apita
l los
s.
Cap
ital l
osse
s on
col
lect
able
s ca
n on
ly b
e de
duct
ible
from
cap
ital g
ains
on
colle
ctab
les.
N
o ca
pita
l los
ses
on p
erso
nal u
se a
sset
s.
Loss
es o
ther
than
cap
ital l
osse
s ca
nnot
be
dedu
cted
aga
inst
cap
ital g
ains
. C
apita
l los
ses
may
be
carr
ied
forw
ards
in
defin
itely
but
can
not b
e ca
rrie
d ba
ckw
ards
.
Sam
e as
set r
ollo
ver
Rol
love
r rel
ief i
s av
aila
ble
on a
sset
tra
nsfe
r bet
wee
n sp
ouse
s in
the
even
t of
a m
arria
ge b
reak
dow
n.
Rep
lace
men
t ass
et ro
llove
r R
ollo
ver r
elie
f is
avai
labl
e fo
r the
ex
chan
ge o
f sha
res
in a
n or
igin
al
com
pany
for s
hare
s in
the
new
co
mpa
ny in
the
even
t of a
mer
ger o
r ta
keov
er.
Rol
love
r rel
ief i
s av
aila
ble
for ‘
busi
ness
as
set f
or b
usin
ess
asse
t tra
nsac
tions
’ fo
r: sm
all b
usin
ess
repl
acem
ent a
sset
s;
asse
ts c
ompu
lsor
ily a
cqui
red,
lost
or
dest
roye
d; s
trata
title
con
vers
ions
; scr
ip
for s
crip
exc
hang
es; a
nd re
new
al o
r su
rren
der o
f sta
tuto
ry li
cenc
es.
Rol
love
r rel
ief i
s pr
ovid
ed w
here
ass
ets
of a
sol
e tra
der (
or p
artn
ersh
ip)
busi
ness
are
tran
sfer
red
to a
com
pany
w
holly
ow
ned
by th
e so
le tr
ader
.
International comparison of Australia’s taxes
Page 218
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f C
anad
a P
erso
nal i
ncom
e ta
x S
epar
ate
taxa
tion
Cum
ulat
ive
life-
time
capi
tal
gain
s al
low
ance
of
C$5
00,0
00 fo
r gai
ns o
n:
(1)
qual
ified
sm
all b
usin
ess
shar
es, o
r (2
) qu
alify
ing
farm
pro
perty
.
Shar
es
Hal
f (50
per
cen
t) in
clus
ion
in n
et ta
xabl
e ca
pita
l gai
ns a
nd ta
xed
at
mar
gina
l (pe
rson
al) r
ates
. C
orpo
rate
bon
ds
Sam
e tre
atm
ent a
s sh
ares
. Pr
inci
pal r
esid
ence
E
xem
pt
Bus
ines
s as
sets
Fo
r dep
reci
able
ass
ets,
exc
ludi
ng re
capt
ure,
and
non
-dep
reci
able
as
sets
, hal
f (50
per
cen
t) in
clus
ion
in n
et ta
xabl
e ca
pita
l gai
ns a
nd ta
xed
at m
argi
nal (
pers
onal
) rat
es.
Full
incl
usio
n in
bus
ines
s in
com
e of
reca
ptur
e am
ount
is ta
xed
at
mar
gina
l (pe
rson
al) r
ates
.
Cap
ital l
osse
s on
list
ed p
erso
nal p
rope
rty
are
dedu
ctib
le o
nly
agai
nst c
apita
l gai
ns o
n lis
ted
pers
onal
pro
perty
. Fi
fty p
er c
ent o
f cap
ital l
osse
s on
sha
res
and/
or d
ebt o
f a q
ualif
ying
sm
all b
usin
ess
corp
orat
ion
can
be d
educ
tible
aga
inst
ca
pita
l gai
ns a
nd ta
xabl
e in
com
e fro
m a
ny
sour
ce (‘
allo
wab
le b
usin
ess
inve
stm
ent
loss
’ rul
es).
Ord
inar
y bu
sine
ss lo
sses
can
be
dedu
ctib
le
agai
nst i
ncom
e fro
m a
ny s
ourc
e, in
clud
ing
taxa
ble
capi
tal g
ains
. C
apita
l los
ses
may
be
carr
ied
forw
ards
in
defin
itely
and
car
ried
back
war
ds fo
r thr
ee
year
s.
Sam
e as
set r
ollo
ver
Rol
love
r rel
ief i
s av
aila
ble
on s
hare
as
set t
rans
fer b
etw
een
spou
ses.
R
epla
cem
ent a
sset
rollo
ver
Rol
love
r rel
ief a
nd d
efer
ral i
s av
aila
ble
unde
r cer
tain
con
ditio
ns w
here
pr
ocee
ds fr
om th
e sa
le o
f a s
mal
l bu
sine
ss c
orpo
ratio
n ar
e in
vest
ed in
an
othe
r elig
ible
sm
all b
usin
ess
corp
orat
ion.
R
ollo
ver r
elie
f is
avai
labl
e fo
r di
spos
ition
s of
real
pro
perty
hel
d fo
r bu
sine
ss p
urpo
ses,
if p
roce
eds
are
rein
vest
ed in
repl
acem
ent p
rope
rty
with
in th
e sp
ecifi
ed ti
mef
ram
e.
Rol
love
r rel
ief i
s av
aila
ble
for ‘
busi
ness
as
set f
or s
hare
’ exc
hang
es if
the
taxp
ayer
rece
ives
sha
res,
cas
h or
oth
er
prop
erty
, in
exch
ange
for b
usin
ess
asse
ts.
Irela
nd
Cap
ital g
ains
tax
Join
t or s
epar
ate
taxa
tion
Cap
ital g
ains
allo
wan
ce o
f €1
,270
aga
inst
net
cap
ital
gain
s.
Shar
es
Incl
uded
in n
et c
apita
l gai
ns a
nd ta
xed
sepa
rate
ly a
t 20
per c
ent f
lat
rate
. S
peci
al 4
0 pe
r cen
t rat
e ap
plie
s to
gai
ns o
n sh
ares
der
ivin
g th
eir v
alue
fro
m c
erta
in la
nd d
evel
opm
ents
. C
orpo
rate
bon
ds
Incl
uded
in n
et c
apita
l gai
ns a
nd ta
xed
sepa
rate
ly a
t 20
per c
ent f
lat
rate
. Pr
inci
pal r
esid
ence
E
xem
pt, b
ut g
ains
on
resi
denc
e tie
d to
dev
elop
men
t of t
he p
rope
rty a
re
taxe
d at
20
per c
ent f
lat r
ate.
B
usin
ess
asse
ts
Incl
uded
in n
et c
apita
l gai
ns, t
axed
at 2
0 pe
r cen
t fla
t rat
e.
Rec
aptu
re o
f dep
reci
atio
n al
low
ance
s is
dis
rega
rded
unl
ess
a lo
ss is
in
curr
ed (i
n w
hich
cas
e re
capt
ure
low
ers
the
allo
wab
le lo
ss).
Exe
mpt
ion
of u
p to
€50
0,00
0 w
here
bus
ines
s is
sol
d up
on re
tirem
ent o
f ow
ner (
if ag
ed a
t lea
st 5
5) a
nd in
clud
es g
ains
on
land
, pla
nt, m
achi
nery
us
ed in
the
busi
ness
if s
old
at s
ame
time
and
to s
ame
pers
on.
Cap
ital g
ains
on
certa
in d
ispo
sals
of
deve
lopm
ent l
and
(sub
ject
to s
epar
ate
capi
tal g
ains
tax
at 4
0 pe
r cen
t rat
e) a
re
ring-
fenc
ed fr
om o
ther
cap
ital l
osse
s.
Oth
erw
ise,
ther
e is
poo
ling
of c
apita
l gai
ns
and
capi
tal l
osse
s.
Cap
ital l
osse
s ca
nnot
be
dedu
cted
aga
inst
ot
her f
orm
s of
inco
me
or g
ains
. (C
apita
l lo
sses
ded
ucte
d on
ly a
gain
st c
apita
l gai
ns.)
Loss
es o
ther
than
cap
ital l
osse
s ca
nnot
be
dedu
cted
aga
inst
cap
ital g
ains
. C
apita
l los
ses
may
be
carr
ied
forw
ards
in
defin
itely
and
if a
cap
ital l
oss
aris
es in
the
fisca
l yea
r in
whi
ch a
taxp
ayer
die
s, th
e ca
pita
l los
s m
ay b
e ca
rrie
d ba
ck th
ree
year
s (o
n a
LIFO
bas
is).
Sam
e as
set r
ollo
ver
Rol
love
r rel
ief i
s av
aila
ble
on a
sset
tra
nsfe
r bet
wee
n sp
ouse
s.
Rep
lace
men
t ass
et ro
llove
r R
ollo
ver r
elie
f is
avai
labl
e on
‘sha
re fo
r sh
are’
exc
hang
es in
a b
usin
ess
reor
gani
satio
n.
Rol
love
r rel
ief i
s av
aila
ble
on tr
ansf
er o
f a
busi
ness
to a
com
pany
in e
xcha
nge
for s
hare
s.
Page 219
Chapter 6: Capital income taxation
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f Ja
pan
Per
sona
l inc
ome
tax
Sep
arat
e ta
xatio
n V
ario
us c
apita
l gai
ns
allo
wan
ce d
epen
ding
on
type
of a
sset
.
Shar
es
Unq
uote
d sh
ares
are
taxe
d se
para
tely
at 2
0 pe
r cen
t fla
t rat
e an
d qu
oted
sha
res
may
be
taxe
d se
para
tely
at 2
0 pe
r cen
t fla
t rat
e (s
peci
al
tax
rate
of 7
per
cen
t, to
200
7) o
r with
hold
ing
at 1
.05
per c
ent f
lat r
ate
appl
ied
to g
ross
pro
ceed
s.
Cor
pora
te b
onds
S
epar
ate
taxa
tion
at 2
0 pe
r cen
t fla
t rat
e.
Prin
cipa
l res
iden
ce
If he
ld g
reat
er th
an te
n ye
ars,
firs
t ¥60
mill
ion
gain
taxe
d at
10
per c
ent
flat r
ate
and
the
exce
ss ta
xed
at 1
5 pe
r cen
t fla
t rat
e.
If he
ld g
reat
er th
an fi
ve y
ears
(but
less
than
ten)
, sep
arat
e ta
xatio
n at
20
per
cen
t fla
t rat
e on
gai
ns n
ot g
reat
er th
an ¥
40 m
illio
n, 2
5 pe
r cen
t ra
te fo
r gai
ns in
exc
ess
of ¥
40 m
illio
n.
Ther
e is
sep
arat
e po
olin
g of
cap
ital g
ains
an
d ca
pita
l los
ses
on s
ecur
ities
(tax
ed
sepa
rate
ly a
t fla
t rat
e), r
eal p
rope
rty h
eld
‘sho
rt an
d lo
ng-te
rm’,
and
othe
r ass
ets.
C
apita
l los
ses
cann
ot b
e de
duct
ed a
gain
st
othe
r for
ms
of in
com
e or
gai
ns, e
xcep
t ca
pita
l los
ses
on th
e sa
le o
f res
iden
tial
prop
erty
may
be
dedu
cted
from
tota
l in
com
e of
nex
t thr
ee y
ears
(lim
ited
to y
ears
in
whi
ch to
tal i
ncom
e is
not
gre
ater
than
¥3
0 m
illio
n) u
nder
cer
tain
con
ditio
ns.
Non
-cap
ital l
osse
s m
ay b
e se
t off
agai
nst
net c
apita
l gai
ns o
n as
sets
oth
er th
an
secu
ritie
s an
d re
al p
rope
rty.
Cap
ital l
osse
s ca
nnot
be
carr
ied
forw
ards
or
back
war
ds o
n se
curit
ies,
land
or b
uild
ings
, bu
t in
certa
in c
ases
may
be
carr
ied
forw
ards
on
quot
ed s
hare
s to
offs
et g
ains
on
quo
ted
shar
es.
Rep
lace
men
t ass
et ro
llove
r R
ollo
ver r
elie
f is
avai
labl
e on
‘sha
re fo
r sh
are’
exc
hang
es, f
or c
orpo
rate
ac
quis
ition
s, if
sha
res
of a
cqui
ring
com
pany
are
reco
rded
at t
he s
ame
book
val
ue a
s sh
ares
of a
cqui
red
com
pany
giv
en in
exc
hang
e.
Rol
love
r rel
ief i
s av
aila
ble
on ‘b
usin
ess
asse
t for
bus
ines
s as
set’
trans
actio
ns,
for e
xcha
nge
of la
nd, b
uild
ings
, m
achi
nery
and
equ
ipm
ent,
ship
s,
owne
d no
t les
s th
an o
ne y
ear,
in re
turn
fo
r sim
ilar a
sset
hel
d by
oth
er p
erso
n no
t les
s th
an o
ne y
ear.
Net
herla
nds
Per
sona
l inc
ome
tax
Sep
arat
e ta
xatio
n N
o ca
pita
l gai
ns a
llow
ance
Shar
es
Exe
mpt
, exc
ept f
or a
25
per c
ent f
lat r
ate
on s
ubst
antia
l sha
reho
ldin
g (d
irect
or i
ndire
ct o
wne
rshi
p of
5 p
er c
ent o
r mor
e of
the
tota
l iss
ued
shar
e ca
pita
l, or
5 p
er c
ent o
r mor
e of
cap
ital o
f a p
artic
ular
cla
ss o
f sh
ares
). C
orpo
rate
bon
ds
Not
taxe
d, e
xcep
t for
gai
ns h
eld
as p
art o
f a s
ubst
antia
l sha
reho
ldin
g.
Prin
cipa
l res
iden
ce
Exe
mpt
, pro
vide
d th
e re
side
nce
is n
ot u
sed
as b
usin
ess
asse
t. B
usin
ess
asse
ts
Gai
ns fr
om th
e sa
le o
f bus
ines
s pr
oper
ty a
re ta
xed
as b
usin
ess
inco
me
at m
argi
nal (
pers
onal
) rat
es.
Ther
e ar
e no
rest
rictio
ns o
n ca
pita
l los
ses
agai
nst c
apita
l gai
ns. C
apita
l gai
ns a
nd
capi
tal l
osse
s ca
n be
agg
rega
ted
on
subs
tant
ial s
hare
hold
ings
(inc
lude
d in
B
ox 2
). C
apita
l los
ses
on s
ubst
antia
l sha
reho
ldin
gs
may
be
dedu
cted
aga
inst
any
oth
er in
com
e fro
m a
sub
stan
tial s
hare
hold
ing
(for
exam
ple
inte
rest
, div
iden
ds).
Twen
ty-fi
ve p
er c
ent o
f exc
ess
capi
tal
loss
es o
n su
bsta
ntia
l sha
reho
ldin
gs m
ay b
e de
duct
ed a
gain
st ta
x on
em
ploy
men
t in
com
e. R
esid
ual e
xces
s ca
pita
l los
ses
may
be
car
ried
back
war
ds o
r for
war
ds.
Box
2 in
vest
men
t los
ses
may
be
dedu
cted
ag
ains
t Box
2 c
apita
l gai
ns.
Cap
ital l
osse
s of
sub
stan
tial s
hare
hold
ings
m
ay b
e ca
rrie
d fo
rwar
ds in
defin
itely
or
carr
ied
back
war
ds fo
r thr
ee y
ears
.
Sam
e as
set r
ollo
ver
Rol
love
r rel
ief i
s av
aila
ble
whe
n bu
sine
ss a
sset
s ar
e so
ld to
an
empl
oyee
or m
embe
r of t
he s
ame
partn
ersh
ip.
Rep
lace
men
t ass
et ro
llove
r R
ollo
ver r
elie
f is
avai
labl
e, u
nder
cer
tain
co
nditi
ons,
for g
ains
on
subs
tant
ial
shar
ehol
ding
s.
Rol
love
r rel
ief i
s av
aila
ble
if th
e pr
ocee
ds fr
om th
e sa
le o
f a b
usin
ess
asse
t are
inve
sted
with
in th
ree
year
s in
an
othe
r bus
ines
s as
set.
Rol
love
r rel
ief i
s av
aila
ble
on th
e tra
nsfe
r of a
bus
ines
s as
set t
o a
corp
orat
ion
in e
xcha
nge
for n
ewly
is
sued
sha
res.
International comparison of Australia’s taxes
Page 220
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f N
ew Z
eala
nd
Per
sona
l inc
ome
tax
Sep
arat
e ta
xatio
n N
o ca
pita
l gai
ns a
llow
ance
Shar
es
Not
taxe
d.
Cor
pora
te b
onds
A
ccru
al ta
xatio
n at
mar
gina
l (pe
rson
al) r
ates
. (E
xpec
ted
gain
s ta
xed
on a
ccru
al b
asis
, whi
le u
nant
icip
ated
ga
ins/
loss
es ta
xed
on re
alis
atio
n.)
Prin
cipa
l res
iden
ce
Not
taxe
d.
Bus
ines
s as
sets
N
ot ta
xed,
exc
ept f
or c
erta
in b
usin
ess
asse
ts th
at a
re h
eld
for r
esal
e (fo
r ex
ampl
e la
nd, p
erso
nal p
rope
rty a
cqui
red
with
inte
ntio
n of
resa
le).
Not
e: N
ew Z
eala
nd d
oes
not h
ave
a ca
pita
l gai
ns ta
x re
gim
e bu
t it t
axes
so
me
inco
me
akin
to c
apita
l gai
ns u
nder
the
norm
al in
com
e ta
x pr
ovis
ions
.
Ther
e ar
e no
rest
rictio
ns o
n ca
pita
l los
ses
agai
nst c
apita
l gai
ns. A
ll co
rpor
ate
bond
s ar
e tre
ated
equ
ival
ently
und
er a
ccru
al ru
les
(no
sepa
rate
poo
ling
of c
apita
l gai
ns a
nd
capi
tal l
osse
s).
Loss
es o
n bo
nds
are
fully
ded
uctib
le
agai
nst c
urre
nt in
com
e.
Net
cap
ital g
ains
taxe
d as
par
t of p
erso
nal
inco
me
may
be
offs
et b
y ot
her l
osse
s.
Cap
ital l
osse
s m
ay b
e ca
rrie
d fo
rwar
ds
inde
finite
ly.
Non
e
Spa
in
Per
sona
l inc
ome
tax
Join
t or s
epar
ate
taxa
tion
No
capi
tal g
ains
allo
wan
ce
Shar
es
Sha
res
held
less
than
one
yea
r are
incl
uded
in n
et ta
xabl
e ca
pita
l gai
ns
and
taxe
d at
mar
gina
l (pe
rson
al) r
ates
, and
sha
res
held
for a
t lea
st o
ne
year
are
taxe
d se
para
tely
at 1
5 pe
r cen
t fla
t rat
e.
Cor
pora
te b
onds
S
ame
treat
men
t as
shar
es.
Prin
cipa
l res
iden
ce
Exe
mpt
, if o
wne
r is
at le
ast 6
5 ye
ars
of a
ge.
Rol
love
r if p
roce
eds
inve
sted
in n
ew p
rimar
y ho
use
(par
tial r
elie
f for
pa
rtial
rein
vest
men
t).
Bus
ines
s as
sets
C
apita
l gai
ns/lo
sses
real
ised
on
busi
ness
ass
ets
are
incl
uded
in
ordi
nary
bus
ines
s in
com
e, ta
xed
at m
argi
nal (
pers
onal
) rat
es.
Rec
aptu
re o
f dep
reci
atio
n w
ith re
fere
nce
to e
ither
act
ual d
epre
ciat
ion
dedu
ctio
ns o
r min
imum
dep
reci
atio
n al
low
ance
s.
Sep
arat
e tre
atm
ent o
f sho
rt-te
rm c
apita
l ga
ins
and
capi
tal l
osse
s (o
n se
curit
ies
held
le
ss th
an o
ne y
ear)
, and
long
-term
cap
ital
gain
s/ca
pita
l los
ses.
S
hort-
term
cap
ital l
osse
s m
ay o
nly
be s
et
off a
gain
st s
hort-
term
cap
ital g
ains
of t
he
sam
e ye
ar a
nd lo
ng-te
rm c
apita
l los
ses
may
onl
y be
set
off
agai
nst l
ong-
term
ca
pita
l gai
ns o
f the
sam
e ye
ar.
Exc
ess
shor
t-ter
m c
apita
l los
ses,
afte
r se
t-off
agai
nst s
hort-
term
cap
ital g
ains
, may
be
ded
ucte
d ag
ains
t 10
per c
ent o
f oth
er
net i
ncom
e ex
clud
ing
long
-term
cap
ital
gain
s.
Bus
ines
s lo
sses
are
ded
uctib
le a
gain
st n
et
shor
t-ter
m c
apita
l gai
ns a
nd ta
xed
as
ordi
nary
inco
me.
U
nuse
d sh
ort-t
erm
cap
ital l
osse
s m
ay b
e ca
rrie
d fo
r fou
r yea
rs to
be
set o
ff ag
ains
t sh
ort-t
erm
cap
ital g
ains
or 1
0 pe
r cen
t of
othe
r net
inco
me
excl
udin
g lo
ng-te
rm
capi
tal g
ains
. Unu
sed
long
-term
cap
ital
loss
es m
ay b
e ca
rrie
d fo
r fou
r yea
rs to
be
set o
ff ag
ains
t lon
g-te
rm c
apita
l gai
ns.
Rep
lace
men
t ass
et ro
llove
r R
ollo
ver r
elie
f is
avai
labl
e fo
r gai
ns o
n pa
rtici
patio
n in
a q
ualif
ying
col
lect
ive
inve
stm
ent i
nstit
utio
n if
rein
vest
ed in
si
mila
r par
ticip
atio
n.
Page 221
Chapter 6: Capital income taxation
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f S
witz
erla
nd
Cap
ital g
ains
tax
Join
t tax
atio
n N
o ca
pita
l gai
ns a
llow
ance
Shar
es
Exe
mpt
C
orpo
rate
bon
ds
Exe
mpt
Pr
inci
pal r
esid
ence
E
xem
pt
Bus
ines
s as
sets
M
ovab
le b
usin
ess
prop
erty
is in
clud
ed a
s or
dina
ry b
usin
ess
inco
me,
ta
xed
at th
e m
argi
nal (
pers
onal
) rat
es.
Imm
ovab
le b
usin
ess
prop
erty
is ta
xed
by c
erta
in c
anto
ns a
s ex
traor
dina
ry b
usin
ess
inco
me
at m
argi
nal c
anto
nal (
pers
onal
) rat
es.
Rec
aptu
re o
f dep
reci
atio
n by
can
tons
follo
win
g m
onis
tic s
yste
m a
nd n
o re
capt
ure
by c
anto
ns fo
llow
ing
dual
istic
sys
tem
.
No
fede
ral c
apita
l gai
ns ta
x on
priv
ate
mov
able
or i
mm
ovab
le p
rope
rty (f
eder
al ta
x on
ly o
n ca
pita
l gai
ns o
r los
ses
on b
usin
ess
asse
ts).
Cap
ital g
ains
tax
on p
rivat
e im
mov
able
pr
oper
ty a
t the
can
tona
l lev
el.
In s
ome
cant
ons,
bus
ines
s lo
sses
may
be
set o
ff ag
ains
t cap
ital g
ains
on
priv
ate
imm
ovab
le p
rope
rty.
Sam
e as
set r
ollo
ver
Join
t tax
atio
n is
ava
ilabl
e fo
r spo
uses
. R
epla
cem
ent a
sset
rollo
ver
Rol
love
r rel
ief i
s av
aila
ble
to ‘b
usin
ess
asse
t for
bus
ines
s as
set’
trans
actio
ns.
Rol
love
r rel
ief i
s av
aila
ble
for ‘
busi
ness
or
bus
ines
s as
set f
or s
hare
’ exc
hang
es.
Uni
ted
Kin
gdom
C
apita
l gai
ns ta
x S
epar
ate
taxa
tion
Cap
ital g
ains
allo
wan
ce o
f £8
,200
(app
lied
agai
nst t
otal
ne
t tax
able
cap
ital g
ains
). N
ote:
In th
e 20
06 B
udge
t, th
e U
nite
d K
ingd
om
Gov
ernm
ent a
nnou
nced
it
wou
ld in
crea
se th
e ca
pita
l ga
ins
allo
wan
ce fo
r in
divi
dual
s an
d m
ost
trust
ees.
Shar
es
Incl
uded
in to
tal n
et ta
xabl
e ca
pita
l gai
ns ta
xed
at to
p m
argi
nal p
erso
nal
rate
on
savi
ngs
inco
me
(10
per c
ent/2
0 pe
r cen
t/40
per c
ent).
To
tal c
harg
eabl
e ca
pita
l gai
ns fo
r non
-bus
ines
s as
sets
equ
als
tota
l ta
xabl
e ca
pita
l gai
ns o
n no
n-bu
sine
ss a
sset
s, le
ss ta
per r
elie
f, gi
ving
m
axim
um e
xem
ptio
n (4
0 pe
r cen
t) fo
r non
-bus
ines
s as
sets
hel
d m
ore
than
ten
year
s.
Cor
pora
te b
onds
S
ame
treat
men
t as
shar
es.
Prin
cipa
l res
iden
ce
Exe
mpt
(sub
ject
to c
ondi
tions
). B
usin
ess
asse
ts
Incl
uded
in to
tal n
et ta
xabl
e ca
pita
l gai
ns a
nd ta
xed
at to
p m
argi
nal
pers
onal
rate
s on
sav
ing
inco
me
(10
per c
ent/2
0 pe
r cen
t/40
per c
ent).
To
tal c
harg
eabl
e ca
pita
l gai
ns fo
r bus
ines
s as
sets
equ
al to
tal t
axab
le
capi
tal g
ains
on
busi
ness
ass
ets,
less
tape
r rel
ief f
or b
usin
ess
asse
ts.
Tape
r rel
ief p
rovi
des
a m
axim
um e
xem
ptio
n of
75
per c
ent f
or b
usin
ess
asse
ts h
eld
long
er th
an tw
o ye
ars.
Ther
e ar
e ge
nera
lly n
o re
stric
tions
on
capi
tal l
osse
s ag
ains
t cap
ital g
ains
. Cap
ital
gain
s an
d ca
pita
l los
ses
can
be a
ggre
gate
d.
How
ever
, cap
ital l
osse
s on
dis
posa
l to
a ‘c
onne
cted
per
son’
may
be
set o
ff on
ly
agai
nst c
apita
l gai
ns o
n di
spos
al to
the
sam
e pe
rson
. C
apita
l los
ses
gene
rally
can
not b
e de
duct
ed a
gain
st o
ther
form
s of
inco
me
or
gain
s. H
owev
er, c
apita
l los
ses
on s
hare
s in
an
unl
iste
d tra
ding
com
pany
may
be
set o
ff ag
ains
t inc
ome
of th
e cu
rren
t tax
yea
r or
proc
eedi
ng ta
x ye
ar.
Exc
ess
inco
me
loss
es (w
hich
can
not b
e se
t of
f aga
inst
inco
me)
may
be
set o
ff ag
ains
t an
y ca
pita
l gai
ns, s
ubje
ct to
con
ditio
ns.
Cap
ital l
osse
s m
ay b
e ca
rrie
d fo
rwar
ds
inde
finite
ly b
ut c
anno
t be
carr
ied
back
war
ds, e
xcep
t whe
re c
apita
l los
ses
aris
e in
yea
r whe
n a
taxp
ayer
die
s, o
r in
a ye
ar w
here
a m
iner
al le
ase
ends
.
Sam
e as
set r
ollo
ver
Rol
love
r rel
ief i
s av
aila
ble
for a
sset
tra
nsfe
rs b
etw
een
spou
ses.
R
epla
cem
ent a
sset
rollo
ver
Rol
love
r rel
ief i
s av
aila
ble
for g
ains
on
shar
es a
nd d
eben
ture
s ex
chan
ged
unde
r cer
tain
reor
gani
satio
ns (i
nclu
ding
ta
keov
ers)
to th
e ex
tent
that
sha
res
in,
or d
eben
ture
s of
, the
rele
vant
com
pany
ar
e re
ceiv
ed in
exc
hang
e. S
peci
al
defe
rral
rule
to ‘h
old-
over
’ gai
ns
inve
sted
in n
ew s
hare
s of
qua
lifyi
ng
unlis
ted
tradi
ng c
ompa
nies
. R
ollo
ver r
elie
f is
avai
labl
e fo
r gai
ns o
n ce
rtain
bus
ines
s as
sets
(prim
arily
bu
sine
ss p
rem
ises
and
goo
dwill
) if t
he
proc
eeds
are
rein
vest
ed in
repl
acem
ent
qual
ifyin
g bu
sine
ss a
sset
s.
Rol
love
r rel
ief i
s av
aila
ble
for g
ains
on
inco
rpor
atio
n of
a b
usin
ess
to th
e ex
tent
th
at c
onsi
dera
tion
com
pris
es s
hare
s in
th
e re
ceiv
ing
(that
is n
ewly
in
corp
orat
ed) c
ompa
ny.
International comparison of Australia’s taxes
Page 222
App
endi
x ta
ble
6.2.
1: T
axat
ion
of c
apita
l gai
ns —
OEC
D-1
0 (c
ontin
ued)
C
ount
ry
Trea
tmen
t of g
ains
C
apita
l los
ses
R
ollo
ver r
elie
f U
nite
d S
tate
s P
erso
nal i
ncom
e ta
x Jo
int o
r sep
arat
e ta
xatio
n C
apita
l gai
ns e
xem
pt
amou
nt o
f US
$250
,000
(U
S$5
00,0
00 fo
r mar
ried
pers
ons
filin
g jo
intly
) for
ga
ins
on p
rinci
pal r
esid
ence
if
owne
d an
d oc
cupi
ed b
y ta
xpay
er a
s pr
inci
pal
resi
denc
e fo
r gre
ater
than
tw
o ye
ars
over
prio
r fiv
e ye
ars.
Shar
es
Sha
res
held
for n
ot m
ore
than
one
yea
r are
incl
uded
in n
et s
hort-
term
ca
pita
l gai
ns a
nd a
re ta
xed
at m
argi
nal (
pers
onal
) rat
es. S
hare
s he
ld
long
er th
an o
ne y
ear a
re in
clud
ed in
net
long
-term
cap
ital g
ains
and
ta
xed
sepa
rate
ly a
t fla
t 15
per c
ent t
ax ra
te (c
urre
ntly
redu
ced
to
5 pe
r cen
t for
taxp
ayer
s w
ith m
argi
nal p
erso
nal r
ate
of 1
0 pe
r cen
t or
15 p
er c
ent f
or o
rdin
ary
tax
purp
oses
). C
orpo
rate
bon
ds
Sam
e tre
atm
ent a
s sh
ares
. Pr
inci
pal r
esid
ence
Ta
xabl
e at
mar
gina
l (pe
rson
al) r
ates
. B
usin
ess
asse
ts
Sub
ject
to s
ome
exce
ptio
ns, p
art o
f gai
n/lo
ss m
easu
red
from
de
prec
iabl
e pe
rson
al p
rope
rty, e
xclu
ding
reca
ptur
e, is
incl
uded
in n
et
capi
tal g
ains
taxe
d at
low
er c
apita
l gai
ns ta
x ra
te.
Sub
ject
to s
ome
exce
ptio
ns, t
he to
tal g
ain/
loss
mea
sure
d fro
m
depr
ecia
ble
real
pro
perty
, with
out r
ecap
ture
, is
incl
uded
in o
rdin
ary
busi
ness
inco
me
taxe
d at
mar
gina
l (pe
rson
al) r
ates
. R
ecap
ture
of p
ast d
epre
ciat
ion
allo
wan
ces
clai
med
is in
clud
ed in
or
dina
ry b
usin
ess
inco
me,
taxe
d at
mar
gina
l (pe
rson
al) r
ates
.
No
rest
rictio
ns o
n ca
pita
l los
ses
agai
nst
capi
tal g
ains
. Cap
ital g
ains
and
cap
ital
loss
es c
an b
e ag
greg
ated
. E
xces
s ca
pita
l los
ses
on s
ecur
ities
hel
d fo
r no
t mor
e th
an o
ne y
ear m
ay b
e se
t off
agai
nst n
et c
apita
l gai
ns o
n se
curit
ies
held
lo
nger
than
one
yea
r; ex
cess
cap
ital l
osse
s on
sec
uriti
es h
eld
mor
e th
an o
ne y
ear m
ay
be s
et o
ff ag
ains
t net
cap
ital g
ains
on
secu
ritie
s he
ld fo
r not
mor
e th
an o
ne y
ear.
Exc
ess
capi
tal l
osse
s (w
hich
can
not b
e se
toff
agai
nst c
apita
l gai
ns) o
f up
to
US
$3,0
00 m
ay b
e se
t off
agai
nst o
rdin
ary
inco
me.
Lo
sses
oth
er th
an c
apita
l los
ses
cann
ot b
e de
duct
ed a
gain
st c
apita
l gai
ns.
Cap
ital l
osse
s m
ay b
e ca
rrie
d fo
rwar
ds
inde
finite
ly.
Sam
e as
set r
ollo
ver
Join
t tax
atio
n is
ava
ilabl
e fo
r spo
uses
. R
epla
cem
ent a
sset
rollo
ver
Rol
love
r rel
ief i
s av
aila
ble
for g
ains
on
certa
in s
mal
l bus
ines
s st
ock
rolle
d ov
er
into
pur
chas
es o
f oth
er e
ligib
le s
mal
l bu
sine
ss s
tock
. R
ollo
ver r
elie
f is
avai
labl
e fo
r gai
ns o
n bu
sine
ss a
sset
s ex
chan
ged
for l
ike-
kind
as
sets
. (Th
is ro
llove
r rel
ief a
lso
appl
ies
to g
ains
on
real
pro
perty
(lan
d) h
eld
for
inve
stm
ent p
urpo
ses,
but
not
to g
ains
on
cor
pora
te s
hare
s/se
curit
ies.
)
Sou
rce:
var
ious
, see
Cha
pter
1 (1
.4.1
).
![Chapter 7 Lie Groups, Lie Algebras and the Exponential Mapcis610/cis61005sl8.pdf · Lie Groups, Lie Algebras and the Exponential Map 7.1 Lie Groups and Lie Algebras In Gallier [?],](https://img.dokumen.tips/doc/110x75/5f0c1a337e708231d433c07b/chapter-7-lie-groups-lie-algebras-and-the-exponential-map-cis610-lie-groups.jpg)
