Did you make a capital gain or capital loss on your shares?
You may make a capital gain or capital loss by selling or giving away your shares, including by selling them to the company under a share buy-back arrangement. Even if you did not pay for your shares, for example, you received them under a demutualisation, you may make a capital gain or capital loss when you sell or give them away.
If you use dividends to acquire additional shares in a company, for example, through a dividend reinvestment plan, the additional shares are subject to CGT if you sell them or give them away.
There are other ways of making a capital gain or capital loss on shares. These include:
- If you held shares in a company and during 2018–19 a liquidator or administrator declared the shares worthless, you can choose to claim a capital loss equal to the reduced cost base of the shares (otherwise you may have to wait until the company is dissolved to claim the capital loss).
- If you received a non-assessable payment (also known as a return of capital) you may have to reduce the cost base and reduced cost base of your shares. If the amount of the non-assessable payment is more than the cost base of the shares, the difference is a capital gain.
Some major share transactions took place during 2018–19 that affected Australian shareholders, see Events affecting shareholders.
Did you make a capital gain or capital loss on cryptocurrency?
A CGT event occurs when you dispose of your cryptocurrency. You may make a capital gain or a capital loss if one of the following occurs:
- you sell, trade or exchange your cryptocurrency
- you use it to obtain goods or services
- you acquired cryptocurrency as an investment and have disposed of it.
If the disposal is part of a business you carry on, or part of a commercial transaction that you enter into with an intention of making a profit or gain, the profits you make on the disposal will generally be assessable as ordinary income and not as a capital gain.
For more information, see Tax treatment of cryptocurrencies.
Did you dispose of shares, stapled securities or rights acquired under an employee share scheme?
Employee share schemes enable you to acquire shares or stapled securities, or obtain rights (including options) to acquire shares or stapled securities, in your employer's company at a discount. The amount of the capital gain may be reduced if you acquired your shares, stapled securities or rights under an employee share scheme.
For more information, see Employee share schemes.
Did you receive, or were you entitled to receive, a share of the income of a trust or managed fund?
Managed funds (unit trusts) include property trusts, share trusts, equity trusts, growth trusts, imputation trusts and balanced trusts. Other trusts include discretionary trusts, family trusts, hybrid trusts and business trusts.
Distributions from trusts and managed funds can include two components that have CGT consequences:
- distributions of trust income where the trust's net income for tax purposes includes a net capital gain, and
- distributions of non-assessable amounts.
You need to know whether your distribution includes these amounts. To find out, check the statement (distribution, year-end or annual statement) from the trust. The statement should also show which method the trust used to calculate the capital gains included in the trust's net capital gain. There are three methods of calculating capital gains:
- indexation
- discount
- 'other'.
You must use the same method as the trust to calculate your own net capital gain.
Trustees and fund managers may use different terms to describe the calculation methods they have used and they may refer to capital gains calculated using the indexation and 'other' methods as 'non-discount gains'. If in doubt, check with your trust or fund manager.
For more information, see:
Did you sell a property you inherited?
Capital gains tax applies when you dispose of CGT assets that you inherited. However, if you inherited real estate, you may not have to pay CGT if you sold it within two years of the person's death, for example, if the property was the deceased person's main residence just before they died and they were not renting any of it out or using any of it for business purposes.
For more information, seeGuide to capital gains tax.
Your home may be subject to capital gains tax
Under the 'main residence exemption', you generally do not have to pay CGT on the disposal of your main residence. However, you may have to pay tax on some of your capital gain if:
- the property was not your main residence for the whole period you owned it
- you used the property, or part of it, to produce assessable income, for example, you rented it out
- the land area was greater than two hectares.
For more information, see Guide to capital gains tax.
Asset transfer on marriage or relationship breakdown
If you transferred an asset to your spouse as a result of a marriage or relationship breakdown, in certain cases there are no immediate CGT consequences. In these cases, there is automatic rollover (you cannot choose whether or not it applies).
However, the person who receives the asset (the transferee spouse) will usually make a capital gain or capital loss when they dispose of the asset. If you were the transferee spouse and rollover applies, you may need to get cost base information from your former spouse or their tax adviser.
For more information, see Guide to capital gains tax.
Your spouse includes another person (of any sex) who:
- you were in a relationship with that was registered under a prescribed state or territory law
- although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.
Foreign residents
Foreign residents who are individuals are subject to CGT on:
- direct interests in real estate located in Australia
- an interest in an entity where they and their associates hold 10% or more of the entity and the value of their interest is principally attributable to Australian real estate
- an asset they have used in carrying on a business through a permanent establishment in Australia
- an option or right to acquire one of the above.
Foreign resident capital gains withholding (FRCGW)
Under the FRCGW rules, foreign residents that dispose of certain Australian assets may have an amount withheld from the sale proceeds they receive.
Similarly, Australian resident vendors could have amounts withheld from their sale proceeds if they:
- dispose of Australian real property with a market value of $750,000 or more, without providing the purchaser with an ATO-issued clearance certificate, or
- dispose of an indirect Australian real property interest without providing the purchaser with a valid vendor declaration (resident).
If you have had amounts withheld from you during the year you are entitled to claim a credit for those amounts paid to the Commissioner by the withholder.
For more information, see Guide to capital gains tax.
Temporary residents
Temporary residents are subject to CGT in the same way as foreign residents.
See Tax-free income for temporary residents in Amounts that you do not pay tax on for the definition of a temporary resident and details of the exemption.
There are special rules for shares and rights acquired under an employee share scheme.
For more information, see Guide to capital gains tax.