Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

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

Division 121 - Record keeping  

Operative provisions  

SECTION 121-20   What records you must keep  

121-20(1)    

You must keep records of every act, transaction, event or circumstance that can reasonably be expected to 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 may happen in the future.)

Note 1:

There are exceptions: see section 121-30 .

EXAMPLES

Example 1:

You dispose of a CGT asset. The records that are relevant to working out your capital gain or loss are records of:

• the date you acquired the asset;

• the date you disposed of it;

• each element of its cost base and reduced cost base and the effect of indexation on those elements;

• what you sold it for (the capital proceeds).

Example 2:

Company A disposes of a CGT asset it acquired from company B (a member of the same wholly-owned group and a foreign resident) where company B obtained a roll-over under Subdivision 126-B . In addition to the records mentioned in example 1, company A needs records showing:

• the status of the 2 companies as members of the group;

• which company is the ultimate holding company in the group;

• the cost base and reduced cost base of the asset in the hands of company B just before the roll-over (because these become company A ' s cost base and reduced cost base).

Example 3:

CGT event G2 (about shifts in share values) happens involving company X and Greg (a controller (for CGT purposes) of company X). Z Nominees Pty Ltd (an associate of Greg ' s) suffers a material decrease in the value of its shares in company X as a result of the shift. Z Nominees needs records showing:

• the essential elements of the relevant scheme;

• the date when the share value shift occurred;

• the amounts of the decreases and increases in the market values of all shares involved in the scheme;

• if shares are issued at a discount under the scheme, the amount of the discount;

• the cost bases and market values of the shares that decreased in value.

Note 2:

There is an administrative penalty if you do not keep records as required by this Division: see section 288-25 in Schedule 1 to the Taxation Administration Act 1953 .

121-20(2)    
The records must be in English, or be readily accessible and convertible into English. They must show what is described in this section. (They show something if they include whatever material is necessary for that thing to be easily identified or worked out.)

121-20(3)    
They must show the nature of the act, transaction, event or circumstance, the day when it happened or arose and:

(a) in the case of an act - who did it; and

(b) in the case of a transaction - who were the parties to it.

121-20(4)    
They must show details (including relevant amounts) of how the act, transaction, event or circumstance is relevant (or can reasonably be expected to be relevant) to working out whether you have made a *capital gain or *capital loss from a *CGT event.

121-20(5)    

If the necessary records of an act, transaction, event or circumstance do not already exist, you must reconstruct them or have someone else reconstruct them.

Example:

Your capital gain or capital loss from a CGT event may depend on the market value of property at a particular time. To record that market value properly, you may need to get a valuation done.

Penalty: 30 penalty units.

Note:

See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

121-20(6)    

An offence under this section is an offence of strict liability.

Note:

For strict liability , see section 6.1 of the Criminal Code .