Keeping records for CGT small business concessions
You must keep records of everything that may be relevant to working out whether you have made a capital gain or loss from a CGT asset.
This means you need records to substantiate the purchase and disposal of any CGT asset, as well as other costs relating to the asset. Records can include contracts, valuations, and details of commissions and legal fees you paid. Penalties can apply if you don't keep the records for at least five years after the relevant CGT event.
If you use information from those records in a later tax return, you may have to keep your records for longer. If you've applied a net capital loss, you should generally keep your records of the CGT event that resulted in the loss until the end of any period of review for the income year in which the net capital loss is fully applied.
The records must:
- show the nature of the act, transaction, event or circumstance, and the date it happened
- be in English, or in a form that can be readily translated into English.
If you don't keep proper CGT records you might have to pay:
- extra expenses to establish the cost of an asset when you dispose of it
- more tax than necessary.
CGT asset register
A convenient way to keep the required records is a CGT asset register. This is a register of information about your CGT assets that you have transferred from your CGT records (for example, invoices, receipts and contracts).
For most assets this information includes:
- the date you acquired the asset
- the cost of the asset
- a description, amount and date for each cost associated with purchasing the asset (for example, stamp duty and legal fees)
- the date the asset was disposed of
- the amount you received when you disposed of the asset
- any other information relevant to working out your CGT obligation.
You can discard your CGT records five years after having an asset register entry certified if you meet all of the following:
- you enter all the necessary information about an asset in your CGT asset register
- the entry is in English and is certified in writing by an approved person (for example, a registered tax agent)
- the asset register entry is certified after 31 December 1997 (although you may have acquired the asset before this date).
If you don't keep an asset register, you generally have to keep CGT records for at least five years after you dispose of an asset. For example, if you hold an asset for 10 years and then sell it, you would have to keep the records for 15 years.
Example: CGT asset register
Max bought a business property on 1 January 2005.
His tax agent advised him to transfer the relevant CGT information from his records to an asset register. He transferred the records of the:
- date he purchased the property
- purchase price
- stamp duty.
His agent certified the register on 1 July 2005.
Max sold the property on 15 September 2010.
Because Max had recorded the details of the property on an asset register, he had to keep records relating to the property only until 1 July 2010, rather than 15 September 2015.
End of example
You must keep records of everything that may be relevant to working out whether you have made a capital gain or loss from a CGT asset. A CGT asset register may be used as a convenient way to keep the required records.