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  • Introduction

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    This guide is designed to help you work out whether any of the assets that you own, or that you may own in the future, will be subject to capital gains tax. It tells you how to work out your capital gain or loss and the amount of tax payable on that capital gain, if any. It also covers what records you have to keep.

    If you have a capital gain or capital loss for 1999-2000, this guide provides information on completing item 14 of the 2000 tax return for individuals (supplementary section).

    You may wish to use capital gains tax worksheets to help you keep track of your records and make sure that you pay no more capital gains tax than necessary. You may copy the blank forms in the back of this guide for that purpose.

    The information in this guide applies to the 1999-2000 and later income years.

    Changes to the law

    For 1999-2000 and later years significant changes have been made to the capital gains tax law. A brief outline of the changes is shown below. More detailed information is provided later in this guide.

    The following changes apply after 11.45 am on 21 September 1999.

    Indexation

    For assets acquired before 11.45 am on 21 September 1999, the indexation of the cost base of an asset is frozen as at 30 September 1999. Individuals, complying superannuation entities and trusts can either choose to use the indexed cost base - frozen as at 30 September 1999 - for assets acquired before 11.45 am on 21 September 1999 or choose the CGT discount.

    Costs incurred after 11.45 am on 21 September 1999 cannot be indexed. Indexation is not available for assets acquired after 11.45 am on 21 September 1999.

    The CGT discount

    If a CGT event happens in relation to a CGT asset after 11.45 am on 21 September 1999 and you acquired the asset at least 12 months before the CGT event, you may be entitled to discount the capital gain after applying capital losses. The discount percentage for an individual or trust is 50 per cent and for a complying superannuation entity it is 33 1/3 per cent. Companies are not eligible for the CGT discount.

    Removal of the CGT averaging concession

    The CGT averaging concession that was available for individual taxpayers and certain trustees has been removed for the 1999-2000 and later income years. For the 1999-2000 income year only, a CGT averaging reduction is available if a capital gain is made from a CGT event that happened in the period 1 July 1999 to 21 September 1999 and certain other conditions are met.

    Small business capital gains tax concessions

    There are now 4 small business capital gains tax concessions applicable to capital gains made from CGT events after 11.45 am on 21 September 1999. They are:

    • mall business 15-year exemption
    • small business 50 per cent active asset reduction
    • small business retirement exemption
    • small business roll-over.

    The former 50 per cent goodwill exemption has been abolished.

    For more information on these concessions refer to the publication Capital gains tax concessions for small business.

    Capital gains tax provisions and plant

    Plant eligible for depreciation is no longer included in the CGT regime. A capital gain or loss you make from a CGT event involving plant, and which happened after 11.45 am on 21 September 1999, is disregarded for capital gains tax purposes. Other income tax provisions apply.

    Scrip for scrip roll-over

    This applies to CGT events that happen on or after 10 December 1999. With effect from that date, this roll-over allows for the deferral of your capital gains liability when certain interests in companies and trusts are exchanged for interests in another entity, typically as a result of a takeover. The roll-over allows you to defer the capital gains liability otherwise arising on the disposal of the original interests until a CGT event happens to the replacement interest.

    Involuntary disposal roll-overs

    This proposed change allows you to defer your capital gains liability if a private purchaser compulsorily acquires an asset of yours through recourse to a statutory power. Previously, the asset had to be acquired by an Australian government agency. This change applies from 1 pm legal time in the Australian Capital Territory (ACT) on 11 November 1999.

    Note: At the time of printing this is not yet law.

    Effect of GST on cost base and capital proceeds

    Changes have been made to the rules for working out capital proceeds, cost base and reduced cost base for taxpayers who are registered for GST. These changes are to apply on or after 1 July 2000. For further information see If capital gains tax affects you, how do you work it out?

    Note: Throughout this publication 11.45 am legal time in the ACT on 21 September 1999 (also known as 'the start time') will be referred to as 11.45 am on 21 September 1999.

    Last modified: 18 Sep 2009QC 18323