Acquiring and owning CGT assets
When you acquire a capital gains tax (CGT) asset, you need to start keeping records of every transaction, event or circumstance that may be relevant to working out whether you've made a capital gain or capital loss.
Your records will help you work out your capital gain or capital loss correctly and ensure you don’t pay more CGT than necessary.
You need to establish exactly when you acquired your CGT asset because:
- CGT doesn't apply if you owned it before CGT started on 20 September 1985 (though major improvements to a property since may be subject to CGT)
- the rules about how you work out the cost base have changed over time
- how long you have had it may affect how you work out your capital gain.
Generally, the time you acquire a CGT asset (your acquisition date) is when you become its owner, most commonly because you have bought it or received it as a gift or it was transferred to you.
However, there are two situations where your acquisition date is likely to be different from the date you become the owner:
- when you buy an asset under contract and don’t take immediate possession (such as with real estate) – in which case your acquisition date is the time you enter into the contract (normally the date on the contract) and not the date of settlement (except for transfers to certain trusts, where the acquisition date is the transfer date – usually settlement)
- when you inherit a CGT asset – in which case the acquisition date is the date of the death of the person who bequeathed it to you.
When you acquire a CGT asset, you need to start keeping records immediately because you might have to pay tax on it in the future. Your records will help ensure you don’t pay more tax than necessary. If you own the asset jointly with someone else, you’ll need to establish each owner’s share.