This guide is designed to help you work out whether any of the assets you own, or may own in the future, will be subject to capital gains tax. It tells you how to work out your capital gain or capital loss. It also covers what records you need to keep.
Your tax return
This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
End of attention
If you have a capital gain or capital loss for 2000-01, this guide will help you (as an individual) or your entity (company, trust or fund) complete the capital gains tax item in your paper-based tax return.
You may wish to use capital gains tax worksheets to help you keep track of your records and make sure you pay no more capital gains tax than necessary.
There is a Capital gain or loss worksheet provided in this guide that you may wish to use to work out your capital gain or loss for each capital gains tax 'event'. There is also a CGT summary worksheet that helps you summarise your capital gains and capital losses to produce the final net amount you need for your tax return. You can tear out these forms and complete them as you work through the guide.
Capital gains tax schedule
If you are an entity (for example a company, trust or fund) with total capital gains or capital losses of more than $10 000 this income year, you need to complete a Capital gains tax (CGT) schedule 2001 (CGT schedule). You can transfer the relevant amounts from your worksheets to your tax return and your CGT schedule.
The CGT schedule is explained in detail in part C and is provided in this guide for your entity's use if required. The schedule replaces several return form labels used in past tax returns.
The information in this guide applies to the 2000-01 income year. Throughout this guide, 11.45am legal time in the ACT on 21 September 1999 (also known as 'the start time') will be referred to as 11.45am on 21 September 1999.
Capital gains tax and GST
If you are a company, trust or fund, you need to consider how capital gains tax interacts with the goods and services tax (GST) introduced on 1 July 2000.
If your entity is registered for GST…
Your GST registration may affect your calculation of a capital gain or capital loss.
Although you are generally entitled to input tax credits on the things you acquire for your business, GST is left out of capital gains tax calculations where it does not represent a real cost or benefit. This is in line with the ordinary income tax rules. The cost base of an asset does not include amounts of corresponding input tax credits to which you are entitled.
You may occasionally need to make adjustments to GST you have collected on assets you have disposed of, or to GST you have claimed as input tax credits (for example, where there is a change in a creditable purpose).
If your entity is not registered for GST…
If your entity is not GST-registered, any GST you incur when acquiring an asset will be included in your cost base, since you are not entitled to claim any associated input tax credits. As you do not include GST in the price of things you sell, your capital proceeds will not require any adjustment for GST.
More information about GST
For more information about how GST affects your entity and whether you should be registered for GST, phone 13 24 78 and have your tax file number handy.
Important things to remember
There have been some changes to capital gains tax. These changes are reflected in the relevant chapters of this guide.
Following is a list of important things to keep in mind when calculating your capital gain or capital loss.
- For assets acquired before 11.45am on 21 September 1999, the indexation of the cost base of an asset is frozen as at 30 September 1999. You cannot use the indexation method to calculate your capital gain for assets acquired after this date.
- If you are not a company, you may be eligible for the CGT discount for any assets sold after 11.45am on 21 September 1999 (see chapter 2 for more information).
- The CGT averaging concession that was available for individual taxpayers and certain trustees has been removed for the 2000-01 and later income years.
- There are four small business capital gains tax concessions for capital gains made from CGT events after the start time. These are explained in Capital gains tax concessions for small business
- Plant eligible for depreciation is no longer relevant to capital gains tax, although other income tax provisions do apply.
If you need more information or would like a copy of any of the publications mentioned in this guide, refer to the sources listed in this guide.
Last modified: 31 Aug 2010QC 16195