Guide to capital gains tax 2005-06

Step - 1 How to complete the capital gain or capital loss worksheet for each CGT event

The Capital gain or capital loss worksheet calculates a capital gain or capital loss for each separate CGT event. Do not attach completed worksheets to your entity's 2006 tax return - these are your working papers and should be kept with your entity's tax records.

There are a few things to remember when you are using the worksheet.

Firstly, you show the type of CGT asset or CGT event that resulted in the capital gain or capital loss.

Organise each of these under one of the following four categories:

• shares and units in unit trusts
• real estate
• other CGT assets (including personal use assets) and any other CGT events
• collectables.

Secondly, there are special rules that apply when working out a capital gain or capital loss for a depreciating asset. A capital gain or capital loss will only arise to the extent that a depreciating asset is used for a non-taxable purpose (for example, used privately). You calculate the capital gain or capital loss according to concepts used in the uniform capital allowance provisions. Those provisions also treat as income or allow as a deduction any gain or loss from a depreciating asset to the extent that it was used for a taxable purpose.

Thirdly, if a capital gain was made, you calculate it using:

• the indexation method (see note 2 of the worksheet) for capital gains made on CGT assets acquired before 11.45am (by legal time in the ACT) on 21 September 1999 and owned for at least 12 months, or
• the discount method (see note 3 of the worksheet) for assets owned for at least 12 months and for which you are not using the indexation method, or
• the 'other' method (if neither the indexation method nor the discount method applies).

These three methods of calculating a capital gain are explained in full in part A chapter 2 and are also listed in Definitions.

When choosing between the indexation and discount methods, the amounts at (a) and (b) at the bottom of the worksheet do not yet reflect any capital losses or CGT discount you may be able to apply. This affects your choice of the amount to transfer to the CGT summary worksheet, which you can use to calculate your net capital gain or net capital loss.

Transfer the capital gain or capital loss calculated on each Capital gain or capital loss worksheet to the CGT summary worksheet. Transfer a capital gain according to the method you used to calculate it and the type of asset that gave rise to it.

Sections within Part C - Instructions for companies, trusts and funds (entities)

• Read this first
• Introduction
• Steps you need to take
• Step - 1 How to complete the capital gain or capital loss worksheet for each CGT event
• Capital gain or capital loss worksheet notes
• Step 2 - How to complete the CGT summary worksheet
• Step 3 - How to complete the capital gains item on your entity's tax return
• Step 4 - How to complete the CGT schedule