Capital gains question

ideaburst

Hi folks,

Suppose you grew an asset from scratch and wanted to sell it (as opposed to buying an asset and then selling it at a profit). I assume either way you would pay capital gains on the profit from the sale at rate of 33%?

So let's Bill starts a YouTube channel and it's worth $110k five years later. The cost associated with selling the channel is 10k (accountants, lawyers, etc).

I take it he would pay approx. 33k in CGT, if his net profit upon disposal is 100k?

And does Bill have to take any profit generated by the YouTube channel into account, or is that separate from the sale (I assume it's the latter and he just pays income tax as usual for that year).

I realise you'd need to engage an accountant for the details, but just looking to get a high level idea, and especially re ways of minimising the tax due. Unreal that the government can take 33%!

Thanks!

davindub

ideaburst wrote: »

Hi folks,

Suppose you grew an asset from scratch and wanted to sell it (as opposed to buying an asset and then selling it at a profit). I assume either way you would pay capital gains on the profit from the sale at rate of 33%?

So let's Bill starts a YouTube channel and it's worth $110k five years later. The cost associated with selling the channel is 10k (accountants, lawyers, etc).

I take it he would pay approx. 33k in CGT, if his net profit upon disposal is 100k?

And does Bill have to take any profit generated by the YouTube channel into account, or is that separate from the sale (I assume it's the latter and he just pays income tax as usual for that year).

I realise you'd need to engage an accountant for the details, but just looking to get a high level idea, and especially re ways of minimising the tax due. Unreal that the government can take 33%!

Thanks!

Supposing a sole trader, profit = income tax

Chargeable business asset sale (goodwill) = cgt but relief is available through retirement relief / entrepreneur relief. Otherwise view cgt as a kinder alternative to income tax!

ideaburst

davindub wrote: »

Supposing a sole trader, profit = income tax

Chargeable business asset sale (goodwill) = cgt but relief is available through retirement relief / entrepreneur relief. Otherwise view cgt as a kinder alternative to income tax!

Thanks! In fairness they've reduced it to 10% for qualifying assets - woo! https://www.revenue.ie/en/gains-gifts-and-inheritance/cgt-reliefs/revised-entrepreneur-relief.aspx

Looks like you can either be a sole trader or a director of the company in question. You just have to have owned the asset for for a continuous period of three years, as long as the three years were in the five years immediately prior to the disposal.