• G, M and A Capital gains tax questions

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

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    For most CGT events a capital gain or capital loss is the difference between what it cost the SMSF to acquire an asset and what the SMSF received when it disposed of the asset.

    An SMSF's net capital gain forms part of its assessable income.

    Generally, an SMSF can disregard any capital gain or capital loss it makes on an asset it acquired before 20 September 1985 (pre-CGT). A capital gain or capital loss that a complying SMSF makes from a CGT event for a segregated current pension asset is also disregarded.

    If the SMSF makes a capital loss, the SMSF cannot claim it against income but can use it to reduce a capital gain in the same income year. If total capital losses exceed total capital gains for the income year, the SMSF has a net capital loss. The SMSF can generally carry the net capital loss forward and deduct it against capital gains in future income years. Net capital losses are applied in the order in which they are made.

    All SMSFs that have one or more CGT events during the income year must complete a Capital gains tax (CGT) schedule and attach it to the annual return if:

    • the total current year capital gains are greater than $10,000, or
    • the total current year capital losses are greater than $10,000.

    If you have current year capital losses, you may also need to complete a Losses schedule 2015.

    You can calculate the SMSF's net capital gain or loss using the:

    Foreign source capital gains

    An Australian super fund makes a capital gain or capital loss if a CGT event happens to any of its worldwide CGT assets.

    An SMSF that is not an Australian super fund makes a capital gain or capital loss if a CGT event happens to a CGT asset that is a taxable Australian property.

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    Example: Capital gains tax

    In 2014–15, SMSF A sold a house for $500,000. It bought the house for $470,000 in 2010. Its capital gain from this sale using the discount method (see Capital gains tax) is $20,000.

    SMSF A reports:

    G Did you have a capital gains tax (CGT) event during the year? Yes

    M Have you applied a CGT exemption or rollover? No

    A Net capital gain $20,000

    End of example

    G Did you have a capital gains tax (CGT) event during the year?

    Answer 'yes' if the SMSF:

    • had a CGT event occur during the income year
    • received a share of net income from a trust that includes a capital gain, or
    • is a subsequent participant in a forestry managed investment scheme and had a CGT event as a result of a harvest or a sale of an interest in the forestry managed investment scheme (see Forestry managed investment schemes).

    No

    Print X in the No box.

    Yes

    Print X in the Yes box.

    M Have you applied a CGT exemption or rollover?

    Did the SMSF have capital gains disregarded or deferred as a result of applying a CGT exemption or rollover?

    No

    Print X in the No box.

    Yes

    Print X in the Yes box. In the code box at M, print the appropriate code from table 2.

    If the SMSF has applied more than one CGT exemption or rollover and you are using software that allows it, select all of the codes that apply.

    If you are lodging on a paper return, print the code that corresponds to the CGT exemption or rollover that resulted in the largest amount of capital gain disregarded or deferred.

    If more than one CGT exemption or roll-over applies to the largest amount of capital gain disregarded or deferred, choose the most specific rollover or exemption code that applies. For example, choose the ‘Scrip for scrip rollover (Subdivision 124-M)’ code before the more general rollover ‘Replacement asset rollovers (Division 124)’ code.

    Table 2: CGT exemptions and roll-over codes

    Code

    Description

    A

    Small business active asset reduction (subdivision 152-C)

    B

    Small business retirement exemption (Subdivision152-D)

    C

    Small business roll-over (Subdivision 152-E)

    D

    Small business 15 year exemption (Subdivision152-B)

    E

    Foreign resident CGT exemption (Division 855)

    F

    Scrip for scrip roll-over (Subdivision 124-M)

    L

    Replacement asset roll-over (Division 124)

    M

    Exchange of shares or units (Subdivision 124-E)

    N

    Exchange of rights or options (Subdivision 124-F)

    O

    Exchange of shares in one company for shares in another company (Division 615)

    P

    Exchange of units in a unit trust for shares in a company (Division 615)

    Q

    Disposal of assets by a trust to a company (Subdivision 124-N)

    S

    Same asset roll-over (Division 126)

    X

    Other exemptions and rollovers

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    A Net capital gain

    Did the SMSF have a net capital gain?

    The SMSF’s net capital gain is the total capital gain for 2014–15 less:

    • any 2014–15 capital losses
    • any prior year net capital losses and
    • any other relevant CGT discount or concession.

    No

    Leave A blank.

    Yes

    Print at A the SMSF's net capital gain.

    Show at A the amount of net capital gain calculated or transferred from:

    • 6A at part 6 of the CGT summary worksheet
    • A at part 6 of the CGT schedule, if any.

    When working out the SMSF's net capital gain, include:

    • net foreign source capital gains
    • the capital gains component of the SMSF's share of net income from a trust
    • the capital gains component of the SMSF's share of a distribution from a partnership
    • capital gains made by the SMSF from a forestry managed investment scheme (see Forestry managed investment schemes).

    If you include an amount at A that is exempt current pension income, include it also at Y Exempt current pension income.

    Non-arm's-length capital gains

    A net capital gain from the sale of an asset by the SMSF is non-arm's-length income if, for example, the asset:

    • was sold to a related party for more than the asset’s market value or
    • was originally acquired from a related party for less than the asset’s market value.

    Complying SMSFs do not include non-arm's-length net capital gains at A. Show these at Non-arm's-length income items U2 or U3.

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    Last modified: 15 Jan 2016QC 44344