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01 November 2019

Asset Disposals & Capital Gains Tax

Asset Disposals and Capital Gains Tax (CGT) 

When you sell or otherwise dispose of an asset it's called a capital gains tax (CGT) event. This is the point at which you make a capital gain or loss. 

There are other CGT events, such as the loss or destruction of a CGT asset. 

For every CGT event that happens to your assets during the year, the net capital gain or loss will need to be calculated. 

The type of CGT event affects how your capital gain or loss is calculated and what can be included in your net capital gain or loss calculation.

Individuals and small businesses (excluding companies) can generally discount a capital gain by 50% if you hold the asset for more than one year. 

For some CGT events, such as exchanging an asset for a replacement asset, you can defer or roll over any capital gain you make until another CGT event (such as selling the replacement asset).

The ATO uses data-matching to find out when you’ve had a CGT event on shares, property and cryptocurrency. 

So asset disposals, including a sale, loss or destruction of an asset, may need to be reported on your annual tax return. 

Keeping adequate records of asset purchases, additions or improvements, and disposals is required to be able to calculate and report your CGT event correctly. 

These are the kind of records you'll need to keep: 

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

Some of these costs may be claimed against income earned on the asset. If you’ve claimed a deduction for the cost already, it can not also be included in the cost base of the asset.  

We have downloadable spreadsheets available for rental property and share transactions that can assist in keeping track of the required records. 

 

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies

 

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