Do not show at this item a 'listed investment company capital gain amount' included in a dividend paid by a listed investment company. See question D8 Dividend deductions 2021.
You may have made a capital gain, or capital loss, if a capital gains tax (CGT) event happened in 2020–21. For most CGT events, you make a:
- capital gain if the amount of money and property you received, or were entitled to receive, from the CGT event was more than the cost base of your asset; you may then have to pay tax on your capital gain
- capital loss if the amount of money and property you received, or were entitled to receive, from the CGT event was less than the reduced cost base of your asset.
If you are a Norfolk Island resident, CGT may apply to assets acquired after 23 October 2015. CGT remains payable on Australian mainland assets.
See also:
Did you have a capital gains tax event in 2020–21?
There is a wide range of CGT events. The most common CGT event happens when you sell or give away a CGT asset, such as:
- real estate, including your family home, holiday home, investment property, hobby farm or vacant block of land
- shares
- units in a unit trust or managed investment fund
- forestry managed investment scheme interests (as a subsequent participant)
- cryptocurrency
- collectables, for example, jewellery
- personal use assets.
Other CGT events occur. Examples are:
- an asset you owned was lost or destroyed
- you received an amount for entering into an agreement, for example, you agreed not to work in a particular industry for a set period of time
- you entered into a conservation covenant over land that you owned
- you received a non-assessable payment from a trust or company.
You may also have made a capital gain if:
- you were a beneficiary of, or had money invested in, a trust (including a managed investment fund), and
- the trust made a capital gain.
If you are not sure whether a CGT event happened in 2020–21, see Appendix 1: Summary of CGT events in Guide to capital gains tax 2021.
You need to know
You cannot deduct a capital loss from your assessable income, but in most cases it can be used to reduce a capital gain you made in 2020–21. If you made no capital gain in 2020–21, defer the capital loss till you make a capital gain. See the note at step 3.
Generally, you disregard a capital gain or capital loss on:
- disposal of your main residence, if you were an Australian resident for tax purposes when you signed the sale contract
- assets you acquired before 20 September 1985
- cars, motorcycles and similar vehicles
- personal use assets such as boats, furniture, electrical goods and household items used or kept mainly for personal use or enjoyment which you acquired for $10,000 or less. If you acquired it
- for more than $10,000, you disregard only capital losses
- for $10,000 or less, you disregard both capital gains and capital losses
- collectables, for example, an antique or jewellery, which you acquired for $500 or less
- compensation you received for personal injury
- the exchange of shares or units you owned in a company or trust under a takeover, if certain conditions were met
- shares in a company, or interests in a trust, where there was a demerger and certain conditions were met
- disposal of shares in a pooled development fund
- shares in a qualifying early stage innovation company (ESIC) held for less than 10 years and, in the case of capital gains, the shares were also held for at least 12 months; see Tax incentives for early stage investors
- disposal of certain investments by
- a venture capital limited partnership
- an early stage venture capital limited partnership
- an Australian venture capital fund of funds
- disposal of an asset to which the small business 15-year exemption applies
- transfer of an asset where the Small business restructure roll-over is available (gains or losses are deferred until the asset is disposed of).
If you are a foreign resident beneficiary of a trust, and if 'managed-investment trust withholding tax' is payable on an amount that you received from that trust (other than in the capacity of a trustee), do not include any part of that amount on your tax return.
No |
Print X in the No box at G item 18 if you did not have a capital gain or your capital gains and losses were deferred. Go to step 4. |
Yes |
Print X in the Yes box at G item 18 if you had a capital gain or a capital loss that was not deferred. Read on. |
Did you dispose of shares, stapled securities or rights acquired under an employee share scheme?
Employee share schemes enable you to:
- acquire shares or stapled securities, or
- obtain rights (including options) to acquire shares or stapled securities
in your employer's company at a discount. The amount of the capital gain may be reduced if you acquired the shares, stapled securities or rights under an employee share scheme.
See also:
Did you receive, or were you entitled to receive, a share of the income of a trust or managed fund?
Managed funds (unit trusts) include:
- property trusts
- share trusts
- equity trusts
- growth trusts
- imputation trusts
- balanced trusts.
Other trusts include:
- discretionary trusts
- family trusts
- hybrid trusts
- business trusts.
Distributions from trusts and managed funds can include two components that have CGT consequences:
- distributions of trust income where the trust's net income for tax purposes includes a net capital gain
- distributions of non-assessable amounts.
You need to know whether your distribution includes these two amounts. To find out, check the statement (distribution statement, year-end or annual statement) from the trust. The statement should also show which method the trust used to calculate the capital gains included in the trust's net capital gain. There are three methods of calculating capital gains:
- indexation
- discount
- 'other'.
You must use the same method as the trust to calculate your own net capital gain.
Trustees and fund managers may use different terms to describe the calculation methods they have used and they may refer to capital gains calculated using the indexation and 'other' methods as 'non-discount gains'. If you are in doubt, check with your trust or fund manager.
Your distribution statement may include amounts called:
- NCMI capital gains
- Excluded from NCMI capital gains
Include both these amounts in the calculation of the net capital gain at 18A.
See also:
Did you make a capital gain or capital loss on your shares?
You may make a capital gain or capital loss by selling or giving away your shares, including by selling them to the company under a share buy-back arrangement. Even if you did not pay for your shares, for example, you received them under a demutualisation, you may make a capital gain or capital loss when you sell or give them away.
If you used dividends to acquire additional shares in a company, for example, through a dividend reinvestment plan, the additional shares are subject to CGT if you sell them or give them away.
There are other ways of making a capital gain or capital loss on shares, such as:
- If you held shares in a company and during 2020–21 a liquidator or administrator declared the shares worthless, you may claim a capital loss equal to the reduced cost base of the shares (otherwise you may have to wait until the company is dissolved to claim the capital loss).
- If you received a return of capital amount (a non-assessable payment) you may have to reduce the cost base and reduced cost base of your shares. If the amount of the non-assessable payment is more than the cost base of the shares, the difference is a capital gain.
Did you make a capital gain or a capital loss on cryptocurrency?
A CGT event occurs when you dispose of your cryptocurrency. You may make a capital gain or a capital loss if one of the following occurs:
- you sell, trade or exchange your cryptocurrency
- you use it to obtain goods or services
- you acquired cryptocurrency as an investment and have disposed of it.
If your disposal of the cryptocurrency is part of a business you carry on, or part of a commercial transaction that you enter into with an intention of making a profit or gain, the profits you make on the disposal will generally be assessable as ordinary income and not as a capital gain.
See also:
Did you sell a property you inherited?
Capital gains tax applies when you dispose of a CGT asset that you inherited. However, if you inherited real estate, you may not have to pay CGT if you sold it within two years of the person's death; for example, if the property was the deceased person's main residence just before they died and they were not:
- renting out any of the property
- using any of the property for business purposes, or
- a foreign resident.
If you inherit an Australian residential property from a deceased person who had been a foreign resident for six years or less at the time of their death, the main residence exemption that the deceased accrued for the dwelling is available to you as the beneficiary. The main residence exemption means you may not pay CGT on any capital gain made after you sell or dispose of the property, depending on the use of the property by both you and the deceased.
If you inherit an Australian residential property from a deceased person who had been a foreign resident for more than six years at the time of their death, any main residence exemption that the deceased person may have accrued for that dwelling is not available to you. This means you may have to pay CGT when you sell or dispose of the property.
If you inherit an Australian residential property and you have been a foreign resident for more than six years when you sell or dispose of the property, you cannot claim the main residence exemption for your ownership period.
There is a transitional period for properties acquired before 7.30pm (AEST) on 9 May 2017, which are disposed of on or before 30 June 2020.
See also:
Your home may be subject to capital gains tax
Under the 'main residence exemption', you generally do not have to pay CGT on the disposal of your main residence if you are an Australian resident for tax purposes at the time of the disposal. However, you may have to pay tax on some of your capital gain if:
- the property was not your main residence for the whole period you owned it
- you used the property, or part of it, to produce assessable income (for example, you rented it out)
- the land area was greater than two hectares.
See also:
Asset transfer on marriage or relationship breakdown
If you transferred an asset to your spouse as a result of a marriage or relationship breakdown, in certain cases, there are no immediate CGT consequences. In these cases, there is automatic rollover (you cannot choose whether or not it applies).
However, the person who received the asset (the transferee spouse) will usually make a capital gain or capital loss when they dispose of the asset. If you were the transferee spouse and rollover applies, you may need to get cost base information from your former spouse or their tax adviser.
Your spouse includes another person (of any sex) who:
- you were in a relationship with that was registered under a prescribed state or territory law
- although not legally married to you, lived with you on a genuine domestic basis in a relationship as a couple.
See also:
Tax incentives for investments in affordable housing
On 12 December 2019, the law was amended to allow an additional affordable housing capital gains discount of up to 10% to Australian resident individuals who provide affordable rental housing to people earning low to moderate income. To qualify for this additional discount, you must have provided qualifying affordable rental housing through a registered community housing provider:
- on or after 1 January 2018 for a period, or periods, totalling at least three years (1,095 days), which may be aggregate usage over different periods
and
- either directly, or through an interposed entity from a trust or managed investment trust. The interposed entity or trust may be a trust or partnership, other than a public unit trust or superannuation fund.
The number of days you may have provided affordable housing before 1 January 2018 will not be counted.
This law change is relevant for CGT events occurring on or after 30 December 2020 as this is the first date that you may be able to satisfy the three year period to qualify for the additional discount.
The overall effect of this additional affordable housing capital gains discount is that the total capital gains discount is now increased from a maximum of 50% to a maximum of 60% for some qualifying investors.
If you invested directly in affordable housing, you should have received an annual affordable housing certificate from your community housing provider showing the number of days your investment property was used to provide affordable housing. If you invested in affordable housing through a trust or managed investment trust, you may need to contact the trustee to get the number of affordable housing days in order to work out your additional affordable housing capital gains discount percentage.
See also:
Foreign residents
Foreign residents who are individuals are subject to CGT on:
- direct interests in real estate located in Australia
- an interest in an entity where they and their associates hold 10% or more of the entity and the value of their interest is principally attributable to Australian real estate
- an asset they have used in carrying on a business through a permanent establishment in Australia
- an option or right to acquire one of the above.
If you were a foreign resident at the time you disposed of your property in Australia, you are not entitled to the CGT main residence exemption (regardless of the period the property was your main residence in Australia and the six-year absence rule), unless:
- you acquired the property before 7.30pm (AEST) on 9 May 2017, and
- you disposed of the property before 1 July 2020.
If you acquired the property at or after 7.30pm (AEST) on 9 May 2017, you are entitled to the CGT main residence exemption if certain life events occur within a continuous period of six years of you becoming a foreign resident for tax purposes.
For more information, see Foreign residents and main residence exemption.
Foreign resident capital gains withholding (FRCGW)
Under the FRCGW rules, foreign residents that dispose of certain Australian assets may have an amount withheld from the sale proceeds they receive.
Similarly, Australian resident vendors could have amounts withheld from their sale proceeds if they:
- dispose of Australian real property with a market value of $750,000 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).
If you have had amounts withheld from you during the year, you are entitled to claim a credit for those amounts paid to the Commissioner by the withholder.
See also:
Temporary residents
Temporary residents are subject to CGT in the same way as foreign residents.
See Tax-free income for temporary residents in Amounts that you do not pay tax on 2021 for the definition of a temporary resident and details of the exemption.
There are special rules for shares and rights acquired under an employee share scheme.
See also:
What you may need
- Details of the amount of any unapplied net capital losses from earlier years (this is the amount at V at the capital gains item on your last year's tax return).
- Documents showing the date you acquired any asset to which a CGT event happened, the date of the CGT event, and the date and amounts of any expenditure you incurred that form part of the cost base and reduced cost base of the asset or are taken into account in working out your capital gain or capital loss.
- Year-end, annual or distribution statements from trusts with net capital gains from which you received or were entitled to receive
- distributions of income, or
- distributions of non-assessable amounts.
You may also need one or more of the following publications to complete this item. They explain the three methods available to calculate a capital gain: the indexation method, the discount method and the 'other' method.
- Capital gains tax explains what a capital gain is, how it applies, what assets are included and the exceptions and exemptions.
- Guide to capital gains tax 2021 explains how CGT works and will help you to calculate your net capital gain or net capital loss. It covers CGT issues such as the sale of a rental property, vacant land, a holiday home, collectables (for example, jewellery), personal use assets (for example, a boat you use for recreation), and real estate, shares and units you inherited or got from the breakdown of your marriage or relationship.
- Personal investors guide to capital gains tax 2021 is shorter and simpler than Guide to capital gains tax 2021. It covers
- the sale, gift or other disposal of shares and units
- distribution of capital gains from managed funds
- non-assessable payments from companies and managed funds.
It does not cover other CGT events, nor the CGT consequences for bonus shares, shares acquired under an employee share scheme, bonus units, rights and options, and shares and units where a takeover or demerger has occurred; for those see Guide to capital gains tax 2021.
- Small business CGT concessions explains what concessions are available to small businesses.
Completing this item
Step 1
Read the publication that is relevant to your circumstances and work out the amount of your capital gain or capital loss for each CGT event that occurred, and the amount of your capital gains from a trust (including a managed fund) for 2020–21.
Step 2
Add up all your capital gains for 2020–21 (except those that are disregarded) to work out your total current year capital gains. Do not apply capital losses, any CGT discounts or the small business concessions (other than the 15-year exemption) to these capital gains. Write this amount at H item 18.
Step 3
Work out your net capital gain or net capital loss. This is the amount remaining after applying to your 2020–21 capital gains whichever of the following items are relevant to you (in the order listed):
- 2020–21 capital losses
- unapplied net capital losses from earlier years
- any CGT discounts (including any additional affordable housing discount)
- the small business 50% active asset reduction
- the small business retirement exemption or rollover.
If you have capital losses to apply, you will find it to your advantage to apply them first to capital gains that do not qualify for the CGT discount.
If you are an individual (including a beneficiary of a trust) and:
- a foreign or temporary resident, or
- an Australian resident with a period of non-residency after 8 May 2012
and you have a discount capital gain, then you may not be entitled to the maximum CGT discount percentage of 50%. For more information, see CGT discount for foreign resident individuals.
If the total amount remaining is positive or zero, write it at A item 18.
If you have a negative amount, do not put anything at A. You have net capital losses to carry forward to later income years. Write the amount at V item 18.
You can only use capital losses from collectables to reduce capital gains from collectables. You must disregard capital losses from personal use assets.
Step 4
Have you applied any exemption, rollover or additional discount?
For more information about CGT exemptions and roll-overs, read Guide to capital gains tax 2021.
No |
Go to step 5. |
Yes |
Print X in the Yes box at M item 18. Read on. |
Using the table below, choose the exemption, rollover or additional discount code that best describes your circumstances. If more than one code applies, choose the code that applies to the largest amount of capital gain.
Code |
CGT exemption or roll-over |
|---|---|
A |
Small business active asset reduction (Subdivision 152-C) |
B |
Small business retirement exemption (Subdivision 152-D) |
C |
Small business roll-over (Subdivision 152-E) |
D |
Small business 15 year exemption (Subdivision 152-B) |
E |
Foreign resident CGT exemption (Division 855) |
F |
Scrip for scrip roll-over (Subdivision 124-M) |
I |
Main residence exemption (Subdivision 118-B) |
J |
Capital gains disregarded as a result of the sale of a pre-CGT asset |
K |
Disposal or creation of assets in a wholly-owned company (Division 122) |
L |
Replacement asset roll-overs (Division 124) |
M |
Exchange of shares or units (Subdivision 124-E) |
N |
Exchange of rights or options (Subdivision 124-F) |
O |
Exchange of shares in one company for shares in another company (Division 615) |
P |
Exchange of units in a unit trust for shares in a company (Division 615) |
R |
Demerger roll-over (Subdivision 125-B) |
S |
Same asset roll-overs (Division 126) |
T |
Small business restructure roll-over (Subdivision 328-G) |
U |
Early stage investor (Subdivision 360-A) |
V |
Venture capital investment (Subdivision 118-F) |
W |
Affordable housing discount |
X |
Other exemptions and rollovers |
Write the code in the CODE box at M item 18.
Use code T if you have either received or disposed of an asset under the Small business restructure roll-over provisions.
Step 5
Did you have any unapplied net capital losses from earlier years?
No |
Go to step 6. |
Yes |
Read on. |
You can use the net capital losses you have from earlier years, and that you have not yet used, to reduce a capital gain in later years.
Write the amount of your net capital losses at V item 18 on your tax return.
If foreign tax was paid on a foreign gain of a capital nature, read part H in question 20 Foreign source income and foreign assets or property 2021 to work out the amount of foreign income tax offset you can claim. Show the foreign income tax offset at O item 20.
Step 6
Are you claiming a credit for amounts withheld under the foreign resident capital gains withholding rules?
No |
|
Yes |
Read on. |
Write the amount of credit you are claiming at X item 18.
Keeping records from the start
You must keep records of every act, transaction, event or circumstance that may be relevant to working out your capital gain or capital loss, regardless of whether the CGT event has already happened, is about to happen or may happen in the future.
You must keep these records for five years from the time when no CGT event or further CGT event can happen. The records for these CGT events may be relevant to working out whether you have made a capital gain or capital loss from the CGT event.
Where to go next
- Go to question 19 Foreign entities 2021.
- Return to main menu Individual tax return instructions 2021.
- Go back to question 17 Net farm management deposits or withdrawals 2021.