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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 will help you work out whether any of the assets you own or may own in the future, and any events that happen, are subject to CGT. It tells you how to work out your capital gain or capital loss, and what records you need to keep.

    New terms

    We may use some terms that are new to you. These words are explained in Definitions. Generally they are also explained in more detail in the section where they first appear.

    While we have sometimes used the word ‘bought’ rather than ‘acquired’, you may have acquired an asset subject to CGT (a CGT asset) without paying for it (for example, as a gift or through an inheritance). Similarly, we refer to ‘selling’ such an asset when you may have disposed of it in some other way (for example, by giving it away or transferring it to someone else). Whether by sale or by any other means, all of these disposals are CGT events.

    Your tax return

    Whether you are an individual or an entity (company, trust or fund), if you have a capital gain or capital loss for 2015–16, this guide will help you to complete the capital gains item on your tax return.

    Worksheets

    You may wish to use the two CGT worksheets provided to help you keep track of your records and make sure you pay no more CGT than necessary.

    There is:

    You can print out these forms and complete them as you work through the guide.

    CGT schedule

    If you are a company, trust, attribution managed investment trust (AMIT) or superannuation fund with total capital gains or capital losses of more than $10,000 this income year, you must complete a Capital gains tax schedule 2016 (CGT schedule). Multi-class AMITs must lodge a separate CGT schedule for each class that has total capital gains or losses of more than $10,000. Partnerships and individuals who lodge a paper tax return are not required to lodge a schedule. Individuals who have entered into an earnout arrangement which requires an amendment to a prior year's assessment should also lodge a schedule.

    The CGT schedule is explained in detail in part C. Part C provides instructions for companies, trusts and funds. Although the instructions for individuals are in part B of this guide, individuals who have entered into an earnout arrangement will also have to refer to Item 7 of Step 4 of Part C if an amendment to a prior year's assessment is required.

    What's new

    Foreign resident capital gains withholding payments

    The foreign resident capital gains withholding regime can apply in the 2016 income year to foreign residents with a 2016 income tax year ending after 30 June 2016, in relation to contracts entered into on or after 1 July 2016.

    A 10 percent non-final withholding obligation will apply to the disposal of:

    • taxable Australian real property with a market value of $2 million or more
    • an indirect Australian real property interest
    • an option or right to acquire such property or interest.

    Where the seller of these Australian assets is a foreign resident, the buyer must pay 10 per cent of the purchase price to the ATO as a foreign resident capital gains withholding payment.

    The foreign resident vendor can claim a credit for the foreign resident capital gains withholding payment by lodging a tax return for the relevant year.

    See New legislation for more information about foreign resident capital gains withholding:

    • obligations
    • exclusions, and
    • exceptions.

    New tax system for managed investment trusts

    Managed investment trusts (MITs) have access to a new tax system, which modernises the tax rules for eligible MITs and increases certainty for investors. The new rules are intended to enhance the international competitiveness of the Australian managed funds industry, and promote the greater export of Australia’s funds management expertise.

    Eligible MITs can elect into the new rules from 1 July 2015 to attribute trust income to beneficiaries on a fair and reasonable basis according to their ownership interests in the MIT. An eligible MIT electing into the system is known as an attribution managed investment trust (AMIT).

    Among other things, the new tax system introduces provisions relating to amounts that affect the cost base of a member's interest in the trust.

    Find out more:

    Trust distributions

    Look–through CGT treatment for earnout rights

    A new look-through CGT treatment applies to look-through earnout rights created on or after 24 April 2015.

    Under the look-through CGT treatment:

    • the capital gains or losses in respect of look-through earnout rights are disregarded;
    • for the buyer, any financial benefit provided (or received) under a look-through earnout right increases (or decreases) the cost base and reduced cost base of the underlying asset; and
    • for the seller, any financial benefit received (or provided) under the look-through earnout right increases (or decreases) the capital proceeds from the disposal of the underlying asset.

    To find out more general information go to Earnout arrangement.

    If you received or provided a financial benefit under a look-through earnout right in an earlier income year, you may need to seek an amendment to your net capital gain (or capital losses carried forward amount) of that earlier income year. You may be able to seek such amendment by simply completing labels 7F and 7G of the CGT schedule. For more information go to Item 7 Earnout arrangements under Step 4 of Part C How to complete the CGT schedule.

    Part A – About capital gains tax

    Do you need to read this part of the guide?

    To find out, answer the following questions. If you answer No to all questions, you don’t need to read part A. Go to part B.

    Have you applied an exemption or rollover?

    If yes then see Exemptions and rollovers.

    Do you need information about the three methods of calculating a capital gain?

    If yes then see How to work out your capital gain or capital loss.

    Have you received a distribution of a capital gain from a managed fund or other unit trust in 2015–16?

    If yes then see Trust distributions.

    Have you sold shares or units in a unit trust in 2015–16?

    If yes then see Investments in shares and units.

    Did you sell real estate or your home (main residence) in 2015–16?

    If yes then see Real estate and main residence.

    Do you need help completing the capital gains item on your individual tax return?

    If yes then see the relevant sections in part A, then work through part B.

    Do you need help completing the capital gains item on your entity’s tax return?

    If yes then see the relevant sections in part A, then work through part C.

    Last modified: 26 May 2016QC 48117