Records of assets for CGT purposes
You may make a capital gain or loss when you sell business assets, other than stock. Your business itself is not an asset for capital gains tax (CGT) purposes, rather, each of your business's assets is a separate CGT asset.
Your records will help you work out your capital gain or capital loss correctly and ensure you don’t pay more CGT than necessary. There may be a big gap between the time when you acquire and dispose of an asset, so it is essential to keep good records from day one.
You need to keep records of everything that may be relevant to working out whether you have made a capital gain or capital loss from an asset. The main CGT records you need to keep are:
- records of the date you acquired an asset and the cost of that asset, for example the purchase contract
- records of the date you disposed of an asset and any proceeds you received when you disposed of it, for example the sale contract
- details of commissions you paid or legal expenses you incurred for an asset
- details of improvements you made to an asset, for example building costs such as renovation or structural improvements
- any other records relevant to calculating your capital gain or capital loss.
You must keep these records for five years after you sell or otherwise dispose of an asset, unless you keep an asset register.
Keeping an asset register may allow you to discard some records that you might otherwise need to keep for a long time.
Once details have been entered into the register and the register has been certified by an approved person (such as a registered tax agent), you only have to keep the documents for five years from the date the register is certified.
When you sell business assets (other than stock) you may make a capital gain or loss, which can increase or reduce your taxable income. You need to keep records of everything that may be relevant to working out whether you have made a capital gain or capital loss.