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Capital gains tax and goods and services tax

Last updated 5 October 2009

If you are a company, trust or fund, you need to consider how CGT interacts with the goods and services tax (GST) introduced on 1 July 2000.

If your entity is registered for GST

Your GST registration may affect your calculation of a capital gain or capital loss.

Although you are generally entitled to input tax credits on the things you acquire for your business, GST is left out of CGT calculations where it does not represent a real cost or benefit. This is in line with the ordinary income tax rules. The cost base of an asset does not include amounts of corresponding input tax credits to which you are entitled.

You may occasionally need to make adjustments to GST you have collected on assets you have disposed of or to GST you have claimed as input tax credits (for example, where there is a change in a creditable purpose).

If your entity is not registered for GST

If your entity is not registered for GST, any GST you incur when acquiring an asset will be included in your cost base since you are not entitled to claim any associated input tax credits. As you do not include GST in the price of things you sell, your capital proceeds will not require any adjustment for GST.

More information about GST

For more information about how GST affects your entity and whether you should be registered for GST, have your tax file number handy and ring 13 24 78