Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 100 - A Guide to capital gains and losses  

SECTION 100-10   Fundamentals of CGT  

100-10(1)    
CGT affects your income tax liability because your assessable income includes your net capital gain for the income year. Your net capital gain is the total of your capital gains for the income year, reduced by certain capital losses you have made.

See later in this Guide (section 100-50) for more detail.

100-10(2)    
When you prepare your income tax return, you need to check whether you have made any capital gains for the income year.

You also need to check whether you have made any capital losses. You cannot deduct a capital loss from your assessable income, but it will reduce your capital gain in the current income year or later income years.

100-10(3)    

You will also need to consider the impact of CGT when doing your financial planning. In particular, you will need adequate record-keeping to deal most effectively with any immediate or future CGT liability.

To give you a sense of the range of things affected by CGT, if you are involved with any of the following, you may have a CGT liability now or at some time in the future:

• leases	• marriage or relationship breakdown
• inheritance	• working from home
• subdividing land	• shares
• goodwill	• a civil court case
• contracts	• trusts
• options	• bankruptcy
• a company liquidation	• incorporating a company
• leaving Australia