A Capital gain is the difference in value between the purchase price of the asset and the price for which it was sold. 

In the context of selling real estate, a capital gain is made when you sell the house that you purchased at a future date for a value greater than what you purchased it for.

This same concept applies with respect to the sale of a business. It is important to note that in the case of a business a capital gain can be made even if you started the business by yourself (ie. without incurring a capital expenditure at the point of purchase). 

If you make a capital gain by selling either a property or a business, the government will impose a tax on the gain you make. This is known as the capital gain tax. 

It is important to note that you will be taxed only on the profits you make from selling the asset and not on the whole sale price. 

The capital gain or the profit you make will be added to your assessable income and then taxed at your marginal rate. 

It is important to disclose any capital gains you had in a given financial year to the government. This is done by including the capital gain or loss (if the value of the asset you sold is less than the value you purchased it for) in your income tax return.  

The capital gain or profit you made is considered as assessable income in the year that the asset was sold. 

You must first determine your net capital gain for a given financial year. The net capital gain is the difference between your total capital gain minus your total capital loss plus any applicable capital gains discounts. 

To determine how much you need to pay by way of capital gains, you need to first determine your total taxable income for a given year. Once this is done you must add the relevant 'net capital gain' to your taxable income. 

Once this is done you will pay the tax based on your marginal tax rate. 

Real estate residential and commercial properties are subject to capital gains. All vacant land, business premises, rental properties, holiday houses and hobby farms are subject to the tax. 

It is important to note that business assets such as 'goodwill' are also subject to capital gains taxes. 

If you acquired property before 20 September 1985, then the property may be exempt from Capital Gains Tax. However, it is important to note that any capital improvements you may have made to that property could be still subject to the tax. 

Outside the above exemption, your principal place of residence is exempt from capital gains tax. 

Generally, if you are considered an Australian resident when accounting taxes and you have held a capital asset for over a period of 12 months in your personal name, then you will receive a 50% discount on the capital gain you have made before it is considered as part of your assessable income. This discount is available to assets held under trust as well.

It is important to note that this discount does not apply to assets held under a company

With respect to foreign and temporary residents, CGT is charged on taxable Australian property, such as real estate in Australia and assets used to carry on a business in Australia.

For properties acquired after 8 May 2021 by foreign and temporary residents, the 50% CGT discount is generally not applicable.

If a foreign resident sells Australian real estate property worth more than $750,000, the buyer should withhold 12.5% of the purchase price and remit it to the Australian Taxation Office.

This amount can then be claimed by the seller at the time of lodging the Australian tax return.