Records for Capital Gains Tax

(c) Commonwealth of Australia, Australian Taxation Office

You must keep records of everything that affects your capital gains and capital losses. Penalties may apply if you do not keep the records for at least five years after the last relevant capital gains tax (CGT) event.

Keeping adequate records of all expenditure will help you correctly work out the amount of capital gain or capital loss you have made when a CGT event happens. It will also help make sure you do not pay more CGT than is necessary. If you have applied a net capital loss, you should generally keep your records of the CGT event that resulted in the loss for four years from the income year when the net capital loss is fully applied.

Keeping good records can help your beneficiaries reduce the impact of CGT after you die. If you leave an asset to another person, the asset may be subject to CGT when a CGT event happens to that asset in the future – for example, if your daughter (the beneficiary) sells the shares (the asset) you have left her in your will.

What records do you need to keep?

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.

The records must be in English (or be readily accessible or translatable into 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, rates and land taxes
  • any market valuations
  • receipts for the cost of maintenance, repairs and modifications, and
  • accounts showing brokerage fees on shares.

 

You should also keep records to establish whether you have claimed an income tax deduction for an item of expenditure. In many cases if you have claimed a deduction for an amount, the expenditure may not be included in the cost base or reduced cost base of a CGT asset.

Exceptions

You do not need to keep records if, for any CGT event, a capital gain or capital loss is disregarded. For example, you do not need to keep records for exempt assets such as cars and motorcycles as the capital gain or loss is disregarded.

It’s never too late

If you acquired assets on or after 20 September 1985 and did not keep records, or your records have inadvertently been destroyed, you can still do something about it.

If you bought real estate, your solicitor or real estate agent may have copies of most of the records you need. You should be able to get copies if you ask for them.

If you made improvements to an investment property – for example, if you built an extension – ask for a copy of the builder’s receipt for payment.

If you bought shares in a company or units in a unit trust, your stockbroker or investment adviser may be able to give you the information you need.

If you received an asset as a gift and you did not get a market valuation at the time, a professional valuer can tell you what its market value was at the relevant date.

The main thing is to get as many details as possible so you can reconstruct your records. Make sure you keep sufficient records in the future.

This information is for guidance only and is not intended as specific advice to any reader. Professional advice should be obtained before acting on any information contained herein. The publisher accepts no responsibility for loss occasioned to any person or organisation as a result of action or the refrain of action as a consequence of the contents of this publication.