• Capital gains tax

    If a donor donates property, there may be capital gains tax (CGT) consequences.

    If CGT applies to a gift of property valued by us at more than $5,000, our valuation can be used to work out the amount of the capital gain or capital loss, but only if our valuation is made within 90 days of the donation.

    Your donor doesn't have to pay CGT on the following gifts of property to DGRs:

    • testamentary gifts (gifts made under a will) – but they can't claim a tax deduction for these
    • property donated under the Cultural Gifts Program
    • exempt personal use assets.

    Example 1 – Capital gains when giving property

    Conrad makes a deductible gift of property to a DGR. He bought the property for $70,000 and its value at the time of the gift was $80,000. As donating a gift can meet the capital gains tax provisions, Conrad may have a capital gain of $10,000 with an amount being included in his taxable income (depending on his circumstances and ignoring the effect of indexation and other capital gains tax rules).

    This could result in a deduction of $80,000 for the gift and an amount of capital gain included in his assessable income.

    Example 2 – Capital loss when giving shares

    George purchased 100 shares in XYZ Resources two years ago at $14 a share. XYZ Resources is a listed public company on an Australian stock exchange.

    George decides to gift the shares to a DGR. George signs and submits a share ownership transfer document to donate the 100 shares to the DGR.

    The market value of the shares at the time George donates the shares was $12 per share, bringing the total market value of the parcel to $1,200. Therefore, George can claim a tax deduction of $1,200.

    As the gifting of shares is a CGT event, George has incurred a capital loss. Assuming a reduced cost base of $14 a share, the capital loss will be the difference between the reduced cost base of the shares ($1,400) and the capital proceeds, which is the market value of the shares ($1,200). Therefore, George has a capital loss of $200. George would have made a capital gain if the market value of the shares was more than the cost base.

    End of example

    See also:

    Guide to capital gains tax

    Last modified: 14 Oct 2015QC 46290