Personal investors guide to capital gains tax 2009

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About this guide

The Personal investors guide to capital gains tax 2008-09 explains the capital gains tax (CGT) consequences of:

• the sale or gift (or other disposal) of shares or units
• the receipt of distributions of capital gains from managed funds, and
• the receipt of non-assessable payments from companies or managed funds.

Who should use this guide?

Use this guide if you are a personal investor who has made a capital gain or capital loss from shares, units or managed funds in 2008-09.

Who should not use this guide?

Do not use this guide if you are an investor who is not a resident of Australia or if you have gains or losses included as part of your income under other provisions of the tax law - for example, if you are carrying on a business of share trading (see the fact sheet Carrying on a business of share trading ).

The guide does not explain more complex issues relating to shares (including employee shares), convertible notes and units. Nor does it apply to shares and units owned by companies, trusts and superannuation funds.

Also, this guide does not cover your CGT consequences when you sell other assets such as:

• a rental property
• collectables (for example, jewellery, art, antiques and collections), and
• assets for personal use (for example, a boat you use for recreation).

For these, see the Guide to capital gains tax 2009 (NAT   4151).

Publications and services

To find out how to get a publication referred to in this guide and for information about our other services, see More information .

Unfamiliar terms

Some of the terms used in this guide may be new to you. Specific terms are explained in Definitions .

Introduction

This guide will help you complete:

• item 18 Capital gains on your Tax return for individuals (supplementary section) 2009 (NAT   2679).

If you sold or otherwise disposed of shares, or units in a unit trust (including a managed fund), in 2008-09, read part   A of this guide, then work through part   B .

If you received a distribution of a capital gain from a managed fund in 2008-09, read part   A of this guide, then work through part   C .

Managed funds include property trusts, share trusts, equity trusts, growth trusts, imputation trusts and balanced trusts.

Small business CGT concessions

If you are involved in the sale of shares or units for a small business, you may wish to read Capital gains tax (CGT) concessions for small business - overview , available only on our website.

Investments in foreign hybrids

A foreign hybrid is an entity that was taxed in Australia as a company but taxed overseas as a partnership. This can include a limited partnership, a limited liability partnership and a United States limited liability company.

If you have an investment in a foreign hybrid (referred to as being a member of a foreign hybrid), you are treated for Australian tax purposes as having an interest in each asset of the partnership.

As a consequence, any capital gain or capital loss made with respect to a foreign hybrid or its assets is taken to be made by the member. More information is available on our website.

General value shifting regime

If you own shares in a company or units (or other fixed interests) in a trust and value has been shifted in or out of your shares or units, you may be affected by value shifting rules. Generally, the rules only affect individuals who control the company or trust, or individuals who are related to individuals or entities that control the company or trust.

For more information, see General value shifting regime: who it affects , available only on our website.

Forestry managed investment schemes

There are specific CGT rules where secondary investors or subsequent participants hold forestry managed investment scheme (FMIS) interests on capital account. These rules apply to FMIS interests sold or disposed of in the 2007-08 income year and later income years.

For more information, see the Guide to capital gains tax 2009 .

Announced changes

Demutualisation of friendly societies

On 24 October 2008, the Assistant Treasurer announced changes to the tax law to provide relief from CGT for policy holders of friendly societies, including joint health and life insurers, which demutualise to for-profit entities.

The announcement proposed that the changes to the law will take effect from 1   July 2008.

ATO references:
NO NAT 4152