What is CGT (Capital Gain Tax)?

CGT - Capital Gain Tax(Definition)

CGT is the abbreviation for capital gains tax. This is a tax that you will pay only on profits you make once you have sold an asset or investment. Once a share or investment asset is sold, it is referred to as being “realized”. Stock shares do not incur CGT until they are sold, no matter long you hold them or how much they increase in value. The tax rate applied to CGT is determined on whether it is a short-term capital gain, sold one year or less from date of purchase or long-term capital gain, held for more than one year. The tax rate also varies depending on the taxpayer’s tax bracket for the year.

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