Excel template for calculating capital gain
Excel template for calculating capital gain
This article provides details of Excel template for calculating capital gain that you can download now.
When you have a capital gain or loss, you must calculate this amount by subtracting the gain or loss from the purchase price of your selling price.
Or, expressed in tax terms, you have to subtract the total adjusted cost base and all the costs and expenses incurred to sell your property from the proceeds of disposition.
First, the proceeds of disposition is the amount of money you receive for your property (the selling price).
The fees and expenses are basically the costs for the sale of the property. For example, if you had repairs to the property before you could sell it, or to pay brokers or surveyors. Legal fees and the cost of advertising to sell your property are included in this category.
The adjusted cost base (also known as PBR) of your property is usually what the property costs (the cost of the property plus the expenses to acquire it, such as legal fees).
(Note that the actual or deemed cost of a property depends on the type of property and how you acquired it, and includes capital expenditures, such as the cost of additions and improvements to the property. (but not current expenses).
The formula used to calculate your loss or capital gain is as follows:
Proceeds of disposition - (adjusted cost base) + expenses and expenses = capital gain or loss.
Microsoft Excel software under a Windows environment is required to use this template
These Excel templates for calculating capital gain work on all versions of Excel since 2007.
Examples of a ready-to-use spreadsheet: Download this table in Excel (.xls) format, and complete it with your specific information.
To be able to use these models correctly, you must first activate the macros at startup.
The file to download presents tow Excel template for calculating capital gain
Capital Gains Tax (CGT) is a tax on the increase in value of an asset when it is sold. Such an asset could consist of land, buildings, stocks and shares, or valuable items such as paintings or boats. For the purposes of calculating the tax, all that matters is how much the asset has appreciated in value (minus some deductible expenses). So, an item that has appreciated in value from US$100 to US$200 would be subject to more tax than an item that has appreciated from US$5,000 to US$5,001.
GT is a relatively new tax in many parts of the world. It was first introduced in the USA in 1913,1 and in the UK in 1965.2 Previously it either did not exist at all or was considered an integral part of a person or company’s ordinary income (which is still the case in many parts of the world). While CGT has a relatively limited role in total revenue collection in richer countries, it has significant importance and potential in many developing countries, especially those with large (or potentially large) extractives sectors. For example, a single capital gains tax payment in Mozambique in 2012 of US$170 million constituted 43% of state revenue from the extractive sector.3 Between 2012 and 2014, Mozambique is estimated to have collected around US$1.3 billion in capital gains taxes from five companies in the extractive industry alone.
How can capital gains tax be made more progressive?
Wealth taxes, such as capital gains tax, are inherently progressive as wealth inequality is on average twice as large as income inequality.5 Ensuring that people pay tax on their wealth, including their capital gains, will therefore be a more progressive measure than making sure they pay tax on their income. CGT rates should be identical or similar to income tax rates (personal and corporate) to avoid taxpayers trying to convert their gains to income or vice versa. When designing a capital gains tax, it is key for countries to ensure that non-residents are covered by the CGT requirement. This should be written into law, but it should also be ensured by not giving away any capital gains taxing rights in tax treaties with other countries.
In 2013, ActionAid exposed how tax treaties can be exploited to avoid paying capital gains tax when it published a document from the global accountancy firm Deloitte in which the firm advised clients that they could avoid paying capital gains tax in Mozambique by investing through Mauritius, based on the tax treaty between Mauritius and Mozambique.6 Mauritius was also a part of the Heritage Oil and Gas Limited Company’s strategy to avoid paying capital gains tax in Uganda. The company was originally domiciled in Bahamas but changed its domicile to Mauritius as Mauritius had a tax treaty with Uganda which would stop Uganda from being able to charge them US$404 million in capital gains tax.7 Following a lengthy legal process, Uganda was finally able to collect the tax, but the company’s behaviour illustrated how companies often see tax treaties as a way of avoiding capital gains liabilities.
Further research published by ActionAid in 2016 showed that 49% of the tax treaties in force left lower-income countries exposed to relatively simple tax planning techniques used to avoid capital gains tax on land, buildings and infrastructure. In addition, more than 70% of tax treaties with lower-income countries prohibited those countries from taxing gains made by foreign corporations when selling shares in local corporations.8 Governments should ensure that individuals and companies cannot avoid capital gains tax through the way they own their assets, such as through a trust or company, or registered in a foreign country.
Taxing capital gains as part of a person or company’s ordinary income is usually progressive. In effect, it would guarantee that capital gains are taxed at least at the same levels as income, while if a person or company has very large capital gains, that income might push their overall income into a higher tax band, meaning that the capital gains would be taxed at a higher rate than their other income. Introducing a threshold or annual allowance under which taxpayers are not liable for capital gains tax can make a tax system more progressive. While taxing capital appreciation is generally progressive, exempting smaller gains from capital gains tax can encourage poorer segments of society to save and invest. The threshold or annual allowance should be low enough to ensure that it doesn’t significantly lower the capital gain liabilities of wealthier taxpayers.