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  • Part A:  How capital gains tax applies to you



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

    End of attention

    What is capital gains tax?

    Capital gains tax (CGT) refers to the tax you pay on any capital gain you make (for example, from the sale of an asset) that you include in your annual income tax return.

    When you sell an asset, this transaction is known as a CGT event. You can only make a capital gain or capital loss if a CGT event happens or you receive a distribution of a capital gain. You show the total of your current year capital gains at label H item 17 in your 2001 tax return for individuals (supplementary section).

    Note: new terms

    We may have used some terms that are not familiar to you. The first time these words are used they are linked to their explanation under the heading Explanation of terms.

    While we have used the word 'bought' rather than 'acquired' in our examples, you may have acquired your shares or units without paying for them (for example, as a gift or through an inheritance). Similarly, we refer to 'selling' shares or units when you may have disposed of them in some other way (for example, giving them away or transferring them to someone else). All of these disposals are CGT events.

    Note: world-wide obligations

    Australian residents make a capital gain or capital loss if a CGT event happens to any of their assets anywhere in the world.

    Capital gains tax affects your income tax if you have made a net capital gain in your current income year. Your net capital gain is the difference between your total capital gains for the year and your total capital losses (including capital losses from prior years), less any CGT discount to which you are entitled. You show your net capital gain at label A item 17.

    Handy Hint

    You need to keep good records of any assets you have bought or sold so you can correctly work out the amount of capital gain or capital loss you have made when the CGT event happens. You must keep these records for five years after the CGT event has happened.

    Last modified: 06 Oct 2009QC 16182