• What records do you need to keep?

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    You must keep records of every act, transaction, event or circumstance that may be relevant to working out whether you have made a capital gain or capital loss from a CGT event. It does not matter whether the CGT event has already happened or whether it may happen in the future.

    The records must be in English (or be readily accessible or convertible to English) and must show:

    • the nature of the act, transaction, event or circumstance
    • the day it happened
    • who did the act or who were the parties to the transaction, and
    • how the act, transaction, event or circumstance is relevant to working out the capital gain or capital loss.

    The following are examples of records you may need to keep:

    • receipts of purchase or transfer
    • details of interest on money you borrowed relating to this asset
    • records of agent, accountant, legal and advertising costs
    • receipts for insurance costs and land rates or taxes
    • any market valuations
    • receipts for the cost of maintenance, repairs or modifications, and
    • accounts showing brokerage on shares.

    Records relating to real estate

    Real estate can include such property as the family home, vacant blocks of land, business premises, rental properties, holiday houses and hobby farms.

    Even though your family home is usually exempt, if you acquired it on or after 20 September 1985 it is advisable to keep all records relating to the home, just as you would for other items of real estate. If the home ceases to be fully exempt at some time in the future, you will need to know the full cost of the home so that you do not pay more capital gains tax than necessary. If you do not have sufficient records, reconstructing them could be difficult. See chapter 6 for details of when your home may not be fully exempt.

    You will need to keep a copy of the purchase contract and all receipts for expenses relating to the purchase of the property, for example, stamp duty, legal fees, survey and valuation fees. You will also need to keep all records relating to the CGT event and all relevant expenses, for example, the sale contract and records of legal fees and stamp duty.

    Keep a record of capital expenditure on improvements, non-capital costs and capital expenditure on maintaining title or right to the asset that you incurred during your period of ownership. These costs may form part of the cost base in working out whether you have made a capital gain or capital loss at the time the CGT event happens.

    Capital expenditure on improvements may include building an extension, addition or improvement, including initial repairs.

    Examples of non-capital costs of real estate include interest, rates and taxes, insurance premiums and cost of repairs for example replacing broken items. You may include only non-capital costs incurred on ownership of a CGT asset acquired on or after 21 August 1991 and only if you are not entitled to a tax deduction for them.

    If the property is your home and you use it to produce income (for example, by renting out part or all of it), you will need to keep records of the period the home is producing income and the proportion of the home you have used to produce income.

    If, after 20 August 1996, you use your home for income-producing purposes for the first time, you will be taken to have acquired your home at that time for its market value. You will use this as your acquisition cost to calculate a capital gain or capital loss at the time the CGT event happens. You will still need to keep details of expenses relating to your home after the date it started producing income.

    Records relating to shares in companies and units in unit trusts

    Most of the records you need to keep to work out your capital gains tax when you dispose of shares in companies or units in unit trusts (including managed funds) will be given to you by the company, the unit trust manager or your stockbroker. It is important for you to keep everything they give you in relation to your shares and units.

    These records will generally provide the following important information:

    • the date of purchase of the shares or units
    • the amount paid to purchase the shares or units
    • the date and amount of any calls if shares were partly paid
    • the sale price if you sell them, and
    • any commissions paid to brokers when you buy or sell them.

    There are special capital gains tax rules for certain shares and units which may affect the records you keep, for example, bonus shares and units, rights and options, and employee shares. See chapter 5 for more information.

    Records relating to bonus shares

    To be safe, if you have received any bonus shares on or after 20 September 1985, keep all the documents the company gives you.

    For any bonus shares issued before 1 July 1987, you need to know when the original shares were acquired. If you acquired them on or after 20 September 1985, you will also need to know what they cost. Flowchart 1 at appendix 4 summarises the different rules applying to the treatment of bonus shares.

    Keep a record of any amounts you paid to acquire the bonus shares and any amounts taxed as a dividend when they were issued. Keep your records for five years after you dispose of any of your shares or units.

    Records relating to inheriting an asset

    You must keep special records when you inherit an asset as a beneficiary of the estate of a person who died on or after 20 September 1985. If the asset was acquired by the deceased person before 20 September 1985, you need to know the market value of the asset at the date of the person's death and the amount of any relevant costs incurred by the executor or trustee. This is the amount that the asset is taken to have cost you. If the executor or trustee has a valuation of the asset, obtain a copy of that valuation report. Otherwise you will need to obtain your own valuation.

    If the asset you inherit was acquired by the deceased person on or after 20 September 1985, you need to know full details of all relevant costs incurred by the deceased person and by the executor or trustee. Obtain those details from the executor or trustee. Even if you inherit a house that was the family home of the deceased person, you need to keep records of costs paid by the deceased person in case you are not able to claim an exemption for the house after you inherit it.

    If, after 20 August 1996, you inherit a house that was the family home of the deceased and it was not regarded as being used to produce income at the time of death, you will be taken to have acquired the house at its market value at the date of death. Make sure you keep details of any other costs you have paid out for the asset since the date you inherited it.

    Last modified: 31 Aug 2010QC 16195