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Certain capital gains are excluded

Last updated 24 February 2020

The CGT discount does not apply to capital gains from certain CGT events. The full list of CGT events is shown in the summary at appendix 1. The CGT discount does not apply to CGT events D1, D2, D3, E9, F1, F2, F5, H2, J2 or J3.

If you make a capital gain from a CGT event that creates a new asset-for example, receiving a payment for agreeing not to do something (entering into a restrictive covenant), you cannot satisfy the 12-month ownership rule so your CGT event does not qualify for the CGT discount.

The CGT discount may be denied:

  • if the CGT event that gave rise to the capital gain occurred under an agreement that was made within 12 months of the acquisition of the asset (section 115-30)
  • on the disposal of certain shares or trust interests in non-widely held companies and trusts, that is, those with fewer than 300 members, or
  • if an arrangement was entered into for the purposes of claiming the CGT discount under which an 'income' asset was converted into a 'capital' asset (conversion of income to capital) (Part IVA of the Income Tax Assessment Act 1936).