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About 765,000 individual taxpayers declared approximately $6.2 billion in net capital gains from shares and property sales in their 2002-03 tax returns. While the amount of net capital gains declared was up by 5%, the number of individual taxpayers declaring income from capital gains was down 27% on the previous year.
Capital gains tax is a strong focus for us this year. We are improving our help products to ensure that individuals can get the assistance they need to understand and calculate their capital gains tax obligations. For example, we developed the AMP demerger capital gains tax calculator and fact sheets on topics such as demutualisation, which can be accessed at www.ato.gov.au
We look for omitted or incorrectly calculated capital gains from:
- rental properties, holiday homes and units, vacant land, and residential units purchased off the plan
- Australian property owned by non-residents
- shares, and
- distributions of capital gains from managed funds.
By systematically matching data, we are increasing our efforts to ensure that individuals return the right amount of capital gain in their tax returns. In particular, we are improving the way we use real estate property data to identify property and vacant land sales that involve large capital gains.
We also match tax return information with data from external sources to help determine whether individuals are correctly reporting capital gains. For example, we:
- increasingly work with the Australian Valuation Office, state revenue offices and commercial providers to gather data on property sales and understand the overall market
- conduct risk assessments on emerging issues, for example, sales of properties in high-capital value growth areas and properties sold off the plan
- examine the Australian Stock Exchange share registry and public data sources for information on share sales, and
- match data reported by managed funds with tax return information.
Last year we compared over 8,000 individual tax returns with share and property sales data. We expect to review triple the number of tax returns for capital gains tax compliance this year, with a particular focus on property sales in high-growth areas and properties sold off the plan.
If we detect a potential discrepancy, we issue an audit letter identifying the properties disposed of by that person for a capital gain. The letter requests details of the capital gains tax calculation and why they did not report any capital gain. Once we have all the necessary information, we may amend their income tax assessment. This year we expect to conduct over 2,500 highly targeted audits, in addition to 3,800 reviews.
Sections within A. Individuals
Last Modified: Tuesday, 11 March 2008