Capital gains tax letter

Receiving your letter

Capital gains tax is the tax you pay on profits from selling assets, such as property.

You may receive a letter if the information we receive indicates that you sold a property, and we haven’t been able to determine if it was your main residence based on the information, we have available.

As such, we haven’t been able to determine whether you need to pay capital gains tax or whether you are entitled to the main residence exemption.

The letter will include a schedule showing the relevant information from your tax return compared with information we hold.

Generally, your main residence is exempt from capital gains tax. The exemption cannot be claimed for property sold as vacant land.

What you need to do

You need to review the capital gains schedule and compare the information with your records. You can then determine if you agree or disagree.

If you have a question about your data-matching letter, phone us on 1300 768 912, and select option 3 between 8:00 am and 6:00 pm, Monday to Friday.

Quote the reference number from your letter when you contact us. You can find it at the top right of your letter.

Below is a sample of the capital gains schedule on the letter. Keep in mind that your letter will contain your own details and may not look exactly like this. The definitions will help explain your schedule.

Sample: capital gains schedule

Capital gains schedule for the year ended 30 June 2022 – [property address]

Purchase date	Purchase price	Sale date	Sale price
15/03/2000	$100,000	30/05/2022	$500,000

Calculation of your capital gain – estimate

Detail	Amount
Purchase price (plus):	$100,000
Estimated purchase, sale and other costs*	$50,000
Total cost base	$150,000
Capital proceeds from disposal of property	$500,000
Gross capital gain	$350,000
Your share of capital gain	$350,000
Less any applicable capital losses	$0
Capital gain prior to discount	$350,000
Applicable discount for eligible transactions	50%
NET CAPITAL GAIN	$175,000

Definitions to understand your schedule

The following definitions will help you understand your schedule:

• Purchase details – information provided by the state and territory revenue and land title offices.
• Sale details – information provided by the state and territory revenue and land title offices.
• Estimated purchase, sale and other costs – we have allowed 10% of the sale price as an estimate of the purchase, sale and other costs associated with the property.
• Total base cost – the total of purchase price and estimated purchase, sale and other costs.
• Capital proceeds from disposal of the property – the amount of money or the value of any property you receive or are entitled to receive as a result of the disposal of the property.
• Gross capital gain – the difference between your asset's total cost base and your capital proceeds.
• Your share of capital gain – if multiple people own this asset, then your share of the capital gain is the portion of the property that you own.
• Capital losses – capital losses from other capital gains tax (CGT) events that you have chosen to apply to this capital gain.
• Capital gain prior to discount – the capital gain before any CGT discount that you may be eligible for has been taken into account.
• Applicable discount for eligible transactions – the CGT discount rate that you may be eligible to apply on your capital gain.
• Net capital gain – the capital gain you need to include in your assessable income.

If you agree

If you agree with the information provided in the letter, you don't have to contact us or take action. We will change your tax return to include the information provided. We will send you an amended notice of assessment after 28 days.

If you realise that, in addition to the amounts we have shown, you have omitted income from other sources or from the same source in other income years, you should give us the details so we can include it in your amended assessments.

We continually check for missing, inaccurate or incomplete information on tax returns.

Once you receive your amended notice of assessment, you'll need to pay any amounts you owe us by the due date.

If you disagree

If you disagree with the information provided, you need to let us know before the due date in your letter. You must also provide supporting documents that show how the amounts are incorrect.

You can contact us by either:

• mail to
  Australian Taxation Office
  PO Box 3543
  ALBURY NSW 2640
• email to
  datamatchingteam@ato.gov.auOpens in a new window

The internet isn't a secure environment and we don't control the path of inbound and outbound emails. If you choose to communicate with us by email, we can't guarantee the privacy of your personal information.

If you respond by the due date

Once we have assessed your response, you'll receive an amended notice of assessment. The case officer reviewing your supporting documents may contact you if we require additional information.

If you don't respond

If we don't receive a response from you within 28 days of your letter's date of issue, we'll automatically amend your tax return using the information we have. You'll then receive an amended notice of assessment.

Supporting documents

If you disagree with information in the letter about your capital gains, we may ask you to provide supporting documents as evidence of your exemption. This may include:

Type of capital gain	Supporting documents
Main residence	Documents that show your address during the relevant dates, from either: an Australian Government department your financial institution your driver's licence a utility bill showing usage details. If you owned other property during that time, documents that show: the addresses of those properties main residence exemptions claimed for those properties.
Partial main residence	Documents that show the dates you resided at the property, from either: an Australian Government department your financial institution your driver's licence a utility bill documents that show the dates you derived income from the property. Documents that show your calculation of the capital gain or loss, including: purchase and sale dates invoices for capital purchases year-end statements. If you are a foreign resident, documents that show: the property was used to carry on a business the foreign residents and/or their associates hold 10% or more of the entity and the value of interest is attributed to Australian real estate.
Rental properties, holiday homes and vacant land	If you're providing us with your own calculation of the capital gain or loss, provide a worksheet that shows: the purchase price and associated purchase expenses such as stamp duty, conveyancing fees and borrowing costs holding costs, such as interest rates and taxes repairs and maintenance   capital improvements, including contracts for building and/or improvement works disposal costs, such as advertising and agent commissions.
Marriage or relationship breakdown rollover	A court order or financial agreement if you disposed of the property (or your share) to your ex-spouse because of a court order of binding financial agreement under the Family Law Act 1985.

You or your tax professional can send this information to us.

What to do if you get a capital gains tax letter from us and you disagree with the details we provide.