The Capital Gains worksheet is where the details regarding the acquisition and disposal of assets subject to Capital Gains Tax are entered and the gain or loss calculated.
Category
Category refers to the category of the asset (for example, Collectables, Personal Use Assets, Shares, Real Estate, Goodwill, Trust Distributions, etc.). You may select from the list of available categories:
| Category Code | Description |
|---|
| R | Real estate is situated in Australia |
| Q | Other real estate |
| S | Shares in companies listed on an Australian Securities Exchange |
| N | Other shares |
| U | Units in unit trusts listed on an Australian Securities Exchange |
| V | Other units in unit trusts. |
From 1 July 2012, R for Real Estate; S or s for Shares; and U for Units in unit trusts are required to be split to differentiate those that specifically relate to Australian property, or Shares and Units in Unit Trusts that are listed on an Australian Securities Exchange from other types of property, shares and units in unit trusts. The dropdown list has therefore been expanded to include the new codes Q, N and V.:
The category code 'F Forestry MIS other than as an initial participant' was removed.
Item number
Item number refers to the number by which the asset will be referenced in the index. Item numbers 0 (zero) and 99 (ninety-nine) are reserved:
0 (zero) is reserved for Prior Year Capital Losses of the particular category of asset. When zero is entered as the Item number, the system will pre-fill the description as Prior Year Loss, close off all other data entry fields, and activate the PY Losses option so that the dissection details may be entered.
99 (ninety-nine) is reserved for Capital Losses Transferred In and is ONLY available for Company returns. When 99 is entered as the Item number, Tax will pre-fill the description as Capital Losses Transferred In.
Description
Description is the ID of the particular asset. This affects how it is identified for both Indexing and Sharing. Enter text that describes the asset.
For commonly used descriptions in AE and Series 6 & 8, a Standard answer may be created. To select these during data entry click the Standard answers icon or [F7] and select from the Index of Standard answers; or, type a caret (^) followed by the code you have given the Standard answer. Refer to Standard answers
Co-owned assets
Where assets are jointly owned and shared between 2 or more returns, in order that a previously shared asset of the same type and description is not overwritten in the co-owners' returns, the description of the asset needs to be different.
For example, if the taxpayer has disposed of more than one lot of shares of Telstra, say, and the description in the worksheet is the same for both transactions, the first transaction shared will be overwritten by the second transaction shared. In order to avoid this, you MUST differentiate the description. For example, the first transaction could be Parcel 1 or Lot 1 Telstra Shares, and the next transaction Parcel 2 or Lot 2 and so on.
Group of Asset
Group of Asset refers solely to the category of the asset where the Capital Gain is distributed from a Partnership or Trust. Select from the list the category of asset gain distributed. These are Collectables, Personal Use Assets or Other – Unit/Split Trust Assets
Active Asset
The Active Asset checkbox must be selected to indicate that this is an active asset. When this checkbox is ticked the Small Business 50% Active Asset Exemption becomes available.Group of Asset: Refers solely to the category of the asset where the Capital Gain is distributed from a Partnership or Trust. Select from the list the category of asset gain distributed. These are Collectables, Personal Use Assets or Other – Unit/Split Trust Assets.
Small Business 50% Active Asset Reduction
The following conditions must be satisfied before the 50% active asset exemption can apply:
The net assets of the business must not exceed $5 million (grouping provisions may apply),
In the case of companies and trusts, there must have been at least one controlling individual immediately prior to the asset disposal.
By answering Yes to this question the capital gain will be discounted by 50% in all circumstances.
Small business 15-Year Exemption
The small business 15-year exemption Is editable for all Categories, except A - Listed Personal-use Assets and P - Non-listed Personal-use Assets. It is available to businesses that qualify for the small business CGT concessions.
Selecting this option provides a total exemption of a capital gain if a small business entity has continuously owned the GCT asset for at least 15 years, the relevant individual is 55 or over and retiring, or is permanently incapacitated and other conditions are satisfied.
Details of Asset
| Field | Details |
|---|
| Purchased | Enter the date of acquisition and the amount paid on acquisition |
| Disposed | Enter the date of disposal and the proceeds received on disposal. |
| FRWCG | Enter the amount of the Credit for non-resident withholding capital gains that has been deducted from the proceeds received by the non-resident for this transaction. |
Foreign Resident Capital Gains Withholding (FRCGW)
Under the Foreign Resident Capital Gains Withholding (FRCGW) rules contained in Tax and Superannuation Laws Amendment (2015 Measures No. 6) Bill 2015, foreign residents who dispose of certain Australian assets may have an amount withheld from the sale proceeds they receive. Similarly, Australian resident vendors who dispose of Australian real property with a market value of $2 million or more without providing the purchaser with an ATO issued clearance certificate, or dispose of an indirect Australian real property interest without providing the purchaser with a valid vendor declaration (resident), could have amounts withheld from their sale proceeds.
The new rules that apply to vendors disposing of certain taxable Australian property under contracts entered into from 1 July, 2016. A 10% non-final withholding will be applied to these transactions at settlement.
Australian resident vendors selling real property will need to obtain a clearance certificate from the ATO prior to settlement, to ensure they don’t incur the 10% non-final withholding.
The foreign resident vendor must lodge a tax return at the end of the financial year, declaring their Australian assessable income, including any capital gain from the disposal of the asset. The vendor may claim a credit for any withholding amount paid to the ATO in their tax return.
Method
Frozen Index
CPI Index: Refers to the indexing factor, this is the amount (rounded to three decimal places) worked out by dividing the CPI quarter figure at the time the asset was disposed of by the CPI quarter figure at the time the cost was incurred. This factor will be applied to the cost base to arrive at the indexed cost base.
Gain/Loss: Refers to the amount of Capital Gain or Capital Loss calculated using the Frozen Index Method.
Discount
This indicates the discounted capital gain after any small business concessions are applied.
If a CGT event happened to a CGT asset you acquired before 11.45am (by legal time in the ACT) on 21 September 1999 and owned for at least 12 months, you can use either the indexation method or the discount method to calculate your capital gain.
If you use the indexation method, some of the cost base expenditure you incurred up to this time may be indexed to account for inflation up to the September 1999 quarter. Only expenditure incurred before this time may be indexed because changes to the law mean indexation was frozen at that date
The discount capital gain will be zero if:
The Nominal Pre-discount Gain/Loss is less than or equal to zero, and
The entity's discount rate is zero because it is a company or a non-complying superannuation fund.
A gain will be calculated in this field if:
Select method: Allows the capital gains calculation method selected by Tax to be overridden. Where an asset is purchased before 21 September 1999 and disposed of after 21 September 1999 and held for 12 months or more, Tax will calculate the capital gain/loss using both methods. Tax will then display the name of the method that produces the lowest capital gain.
Where Tax selects the Frozen index method as the lowest capital gain, FI is displayed in the field, but this method may be overridden by selecting DS (Discount override).
Similarly, where Tax Discount method is selected as the lowest capital gain, DS is displayed in the field, however this method may be overridden by selecting FI.
The field will not be editable if:
The asset was purchased and disposed of before 21 September 1999 - FI is the default and cannot be changed; or
The asset was purchased and disposed of on or after 21 September 1999 - DS is the default and cannot be changed.
Capital Gain/Loss: Displays the calculated capital gain or loss.
Where the frozen index method is system-calculated, or overridden by the user, the amount in the Frozen Index Method Gain/Loss is shown as the Capital Gain/Loss.
Where the discount method is system calculated or overridden by the user, the Discount Capital Gain amount is shown where it is greater than zero. It will be zero where there is a capital loss or the entity type does not quality for the discount (because it is a company or a non-complying superannuation fund).
Residency Status at 8/5/2012
This button accesses the dialog where details required for Non-residents may be entered. Refer to Non-Residents No CGT discount after 8 May 2012.
Index of Exemptions
Use these buttons to detail each exemption for the current item by creating entries in the appropriate Index of Exemptions.
Each asset may only have one exemption code transmitted electronically to the ATO, therefore where you have multiple entries for any one CGT event and have selected different codes, Tax will use the first code entered as the main reason for the Exemption (the one code also applies to the reason for the rollover).
Index of Exemptions
| Button name | Details |
|---|
General Exemptions | This refers to specific exemptions under the CGT provisions that are in addition to the general exclusion from capital gains tax of assets purchased before 20 September, 1985. From 1 July 2012, you will be required to select a code relative to the exemption. For further details refer to the Guide to Capital Gains Tax available on the ATO website; also refer to General Exemption Details. |
Roll-over or Retirement Exemptions | This refers to roll-over and retirement exemptions available to businesses that qualify for the small business CGT concessions. From 1 July 2012, you will be required to select a code relative to the exemption. For further details refer to the Guide to Capital Gains Tax available on the ATO website. Any Roll-over or Retirement exemption amount(s) are applied after the application of any Discount and/or 50% Active Asset reduction; also refer to Rollover / Retirement. |
Shared Ownership | Shared ownership refers to the facility to share the Capital Gain or Capital Loss with another taxpayer on a percentage basis. Click [Alt+S] to gain access to the Shared Ownership Index. All returns contained in the ledger will be displayed. Refer to Shared Ownership Distribution Details. |
Capital Additions | Click [Alt+A] to gain access to the Additions Index. Refer to Capital Additions. |
Allowed as Deductions | Click [Alt+W] to gain access to the Allowed as Deductions Index. Refer to Allowed as Deductions. |
Deductions Recouped | Click [Alt+D] to gain access to the Deductions Recouped Index. Refer to Deductions Recouped. |
Section 104-70 Income | Click [Alt+7] to gain access to the Section 104-70 index. Additional detailed Help is available for this option. Refer to Section 104-70 Income. |
Prior year capital losses
Prior year capital losses must be entered in accordance with the category of the loss. To record prior year capital losses therefore, firstly select the asset category; then enter zero (0) in the Item number field. The heading PRIOR YEAR LOSS will default to the description field. All non-relevant fields will be closed and the cursor will jump to the Amount field for you to record the amount of the prior year capital loss.
Application of Capital Losses
The application of losses is automated by the tax program and occurs on integration from the Capital Gains Index to the label in the main income tax return.
Capital Losses are applied:
Current year capital losses are firstly applied to capital gains from assets of the same category as the loss, then all 'other capital losses' (other than Collectables) are applied to the remaining capital gain (other than Collectables).
Prior year losses are applied in the same fashion as current year capital losses (other than Collectables)
Personal Use Assets (other than collectables) may not incur a loss.
