Chargeable gains for Capital Gains Tax are the gains after deducting the annual exemption. If gains total €4,500 and the exemption is €1,270, what is the chargeable gain?

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Prepare for the QFA Investments Exam 1. Study with flashcards and multiple-choice questions with detailed explanations. Enhance your understanding and succeed on your exam!

Multiple Choice

Chargeable gains for Capital Gains Tax are the gains after deducting the annual exemption. If gains total €4,500 and the exemption is €1,270, what is the chargeable gain?

Explanation:
Chargeable gains are the gains after applying the annual exemption. Subtract the exemption from the total gains: 4,500 − 1,270 = 3,230. So the chargeable gain is 3,230. If you don’t subtract the exemption, you’d have 4,500; if you subtracted a different amount, you’d misstate the net gain subject to CGT; and the exemption amount alone (1,270) isn’t the net gain, it’s the reduction you apply.

Chargeable gains are the gains after applying the annual exemption. Subtract the exemption from the total gains: 4,500 − 1,270 = 3,230. So the chargeable gain is 3,230.

If you don’t subtract the exemption, you’d have 4,500; if you subtracted a different amount, you’d misstate the net gain subject to CGT; and the exemption amount alone (1,270) isn’t the net gain, it’s the reduction you apply.

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