What is a CGT asset?
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Many CGT assets are easily recognisable, for example, land and buildings, shares in a company and units in a unit trust. Other CGT assets are not so well understood, for example, contractual rights, options, foreign currency and goodwill. All assets are subject to the capital gains tax rules unless they are specifically excluded.
CGT assets fall into three categories: collectables, personal use assets and other assets.
Collectables include the following items that are used or kept mainly for the personal use or enjoyment of you or your associate(s):
- paintings, sculptures, drawings, engravings or photographs; reproductions of these items or property of a similar description or use
- coins or medallions
- rare folios, manuscripts or books, and
- postage stamps or first day covers.
A collectable is also:
- an interest in any of those items
- a debt that arises from any of those items, or
- an option or right to acquire any of those items.
Any capital gain or capital loss you make from a collectable acquired for $500 or less is disregarded. A capital gain or capital loss you make from an interest in a collectable is disregarded if the market value of the collectable when you acquired the interest was $500 or less. However, if you acquired the interest for $500 or less before 16 December 1995, a capital gain or capital loss is disregarded.
If you dispose of collectables individually that you would usually dispose of as a set, you are exempt from paying capital gains tax only if you acquired the set for $500 or less. This does not apply to collectables you acquired before 16 December 1995.
Personal use assets
A personal use asset is:
- a CGT asset, other than a collectable, that is used or kept mainly for the personal use or enjoyment of you or your associate(s)
- an option or a right to acquire a CGT asset of this type
- a debt resulting from a CGT event involving a CGT asset kept mainly for your personal use and enjoyment, or
- a debt resulting from you doing something other than gaining or producing your assessable income or carrying on a business.
Personal use assets include such items as boats, furniture, electrical goods and household items. Land and buildings are not personal use assets. Any capital loss you make from a personal use asset is disregarded.
If a CGT event happened to a personal use asset during or after the 1998-99 income year, any capital gain you make from the asset or part of the asset is disregarded if you acquired the asset for $10 000 or less.
If you dispose of personal use assets individually that would usually be sold as a set, you obtain the exemption only if you acquired the set for $10 000 or less.
All other assets
Assets that are not collectables or personal use assets include:
- land and buildings
- shares in a company
- rights and options
- units in a unit trust
- instalment receipts
- convertible notes
- your home (see Exemptions)
- contractual rights
- foreign currency, and
- any major capital improvement (above the improvement threshold) made to certain land or pre-CGT assets. Improvement thresholds are listed in the table Improvement thresholds for 1985-86 and 2000-01.
It is the individual partners who make a capital gain or capital loss from a CGT event, not the partnership itself. For capital gains tax purposes, each partner owns a proportionate share of each CGT asset.
For capital gains tax purposes, individuals who own an asset as joint tenants are each treated as if they own an equal interest in the asset as a tenant in common (see Joint tenants in chapter 9 for more information).
Separate assets: Buildings and structures on land
For capital gains tax purposes, there are exceptions to the rule that what is attached to the land is part of the land. In some circumstances, a building or structure is considered to be a separate CGT asset from the land.
This may be the case if, on or after 20 September 1985:
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- you entered into a contract for the construction of the building or structure, or
- construction began.