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  • Exemptions

    There are some capital gains you can disregard (that is, you do not have to include them in your assessable income) and some capital losses you must disregard (that is, you can't use them to offset a capital gain and therefore reduce your assessable income).

    Some of the more common exemptions include capital gains or capital losses for:

    • your main residence (but there are some exceptions)
    • your car (that is, a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers), motorcycle or similar vehicle
    • pre-CGT assets (assets you acquired before 20 September 1985) with the exception of some pre-CGT shares in private companies, or pre-CGT interests in private trusts, where a combination of factors can occasionally trigger a CGT event giving rise to a taxable capital gain
    • some collectables and other items for personal use  
    • depreciating assets used solely for taxable purposes
    • a decoration awarded for valour or brave conduct, unless you paid money or gave any other property for it
    • CGT assets used solely to produce exempt income or some types of non-assessable non-exempt income
    • shares in a pooled development fund
    • compensation or damages you receive for any  
      • wrong or injury you suffered in your occupation
      • wrong, injury or illness you or your relatives suffered
    • winnings or losses from gambling, a game or a competition with prizes
    • payments made under the German Forced Labour Compensation Programme (GFLCP), and certain payments or property received by Australian residents as a result of persecution during the Second World War
    • reimbursement or payment of your expenses under the following  
      • Unlawful Termination Assistance Scheme
      • Alternative Dispute Resolution Assistance Scheme
      • M4/M5 Cashback Scheme
      • a scheme established by an Australian government agency, a local government body or foreign government agency under an Act or other legislative instrument (for example, regulations or local government by-laws) – ‘expenses’ in this context does not include a payment for the loss, destruction or transfer of an asset
    • a payment or grant under prescribed industry re-establishment or exit grants (for example, the dairy, sugar and tobacco industry exit programs)
    • assets you inherit
    • your rights in relation to a superannuation agreement (as defined in the Family Law Act 1975), being created or ended
    • the transfer of a super interest in one small super fund to another small super fund on the breakdown of the relationship between spouses or former spouses
    • a CGT event happening to the segregated current pension asset of a complying super fund
    • some payouts under a general insurance policy, life insurance policy or annuity instrument
    • a CGT asset that is your trading stock at the time of the CGT event
    • your share of certain profits , gains or losses arising from disposal of investments by a venture capital limited partnership (VCLP), an early stage venture capital limited partnership (ESVCLP) or an Australian venture capital fund of funds (AFOF) (see the publication Venture capital tax concession: overview)
    • a financial arrangement where gains and losses are calculated under the TOFA rules
    • some types of testamentary gifts.

    Main residence

    A capital gain or capital loss you make from a CGT event relating to a dwelling that was your ‘main residence’ (your home) is generally exempt. However, the exemption depends on how you came to own the dwelling and what you have done with it – for example, whether you have rented it out at any time, including having a lodger (see Selling your home).

    Collectables

    Collectables include the following items used or kept mainly for the personal use or enjoyment of you or your associates:

    • paintings, sculptures, drawings, engravings or photographs; reproductions of these items; or property of a similar description or use
    • jewellery
    • antiques
    • coins or medallions
    • rare folios, manuscripts or books, and
    • postage stamps or first day covers.

    A collectable is also:

    • an interest in any of the items listed above
    • a debt that arises from any of those items, or
    • an option or right to acquire any of those items.

    You disregard any capital gain or capital loss you make from a collectable if any of the following apply:

    • you acquired the collectable for $500 or less
    • you acquired your interest in the collectable for $500 or less before 16 December 1995, or
    • you acquired an interest in the collectable when it had a market value of $500 or less.

    If you dispose of individual collectables that you would usually dispose of as a set, you are exempt from paying CGT only if you acquired the set for $500 or less on or after 16 December 1995.

    Capital losses from collectables can be used only to reduce capital gains (including future capital gains) from collectables. As is the case with any capital loss, there is no time limit on how long you can carry forward a net capital loss from a collectable.

    Personal use assets

    Personal use assets are CGT assets, other than collectables, used or kept mainly for the personal use or enjoyment of you or your associates. Any personal use asset you acquired for less than $10,000 is disregarded for CGT purposes.

    Personal use assets include:

    • boats
    • furniture
    • electrical goods
    • household items.

    A personal use asset is also:

    • an option, or a right, to acquire a personal use asset
    • a debt resulting from  
      • a CGT event involving a CGT asset kept mainly for your personal use and enjoyment
      • you doing something other than gaining or producing your assessable income or carrying on a business (for example, making a private loan to a family member or friend).

    Assets that are not considered to be personal use assets include:

    • land and buildings
    • shares in a company
    • rights and options
    • units in a unit trust
    • leases
    • convertible notes
    • your home
    • foreign currency
    • goodwill
    • contractual rights
    • any major capital improvement made to certain land or pre CGT assets.

    If you dispose of personal use assets individually that would usually be sold as a set, you get the exemption only if you acquired the set for $10,000 or less.

    All capital losses you make on personal use assets are disregarded. This means you cannot use capital losses on personal use assets to reduce your capital gains on other personal use assets.

    Depreciating assets

    CGT does not apply to depreciating assets you use solely for taxable purposes. Gains (or losses) made on these assets are treated as assessable income (or claimed as deductions). Such assets may include business equipment or fittings in a rental property. However, if you have used a depreciating asset for a non-taxable purpose (for example, used it for private purposes) the CGT rules apply.

    Find out more

    Capital gains tax and depreciating assets

    End of find out more
    • Last modified: 13 Feb 2015QC 22163