Guide to capital gains tax 2005

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Part C - Instructions for companies, trusts and funds (entities)

Individuals: if you use the worksheets and need help completing them, read steps 1, 2 and 3 in this part (ignore the word 'entity')

Introduction

Steps you need to take

Step 1 - How to complete the capital gain or capital loss worksheet for each CGT event

Step 2 - How to complete the CGT summary worksheet

Step 3 - How to complete the capital gains item on your entity's tax return

Step 4 - How to complete the CGT schedule

Read this first

Are you an individual?

If you are completing a tax return on behalf of an individual (rather than an entity), read part B .

If you need help completing the:

• Capital gain or capital loss worksheet - read step 1 of this part of the guide (ignoring the word entity)
• CGT summary worksheet - read steps 2 and 3 in this part.

Is your entity a company, trust or fund?

Read this part.

Do you expect your entity's total capital gains or total capital losses for the 2004 - 05 income year to be $10,000 or less?

Yes	Work through steps 1, 2 and 3.
No	Work through steps 1 - 4. Step 4 will show you how to complete the Capital gains tax (CGT) schedule 2005 .

Introduction

The instructions in this part are designed to help companies, trusts and funds (your entity) to calculate a capital gain or capital loss and to complete the capital gains items on the relevant tax return:

• Company tax return 2005 - item 7
• Trust tax return 2005 - item 18 , or
• Fund income tax and regulatory return 2005 - item 9a .

Funds include superannuation funds, approved deposit funds and pooled superannuation trusts.

The labels to complete at these items are:

G	Did you have a CGT event during the year?
A	Net capital gain

You will also need to complete V Net capital losses carried forward to later income years at the Losses information item on your entity's tax return.

The relevant item number will be:

• Company tax return 2005 - item 10
• Trust tax return 2005 - item 24
• Fund income tax and regulatory return 2005 - item 10.

New terms

We may use some terms that are new to you. These words are explained in Definitions . Generally they are also explained in more detail in the section where they first appear.

Entity

The term 'entity' is used to describe a company (including a head company of a consolidated group), a trust and a fund in this part of the guide.

Worksheets

The worksheets provided at the back of this guide are the:

• Capital gain or capital loss worksheet (to calculate the capital gain or capital loss from each CGT event)
• CGT summary worksheet (to calculate the net capital gain for the 2004 - 05 income year or net capital losses carried forward to later income years and complete the CGT labels on the 2005 tax return).

You can tear out the worksheets and complete them as you work through this part.

The worksheets are optional and your entity may prefer to use a different worksheet or a computer-based alternative. We have used these worksheets throughout this part of the guide as examples to help you complete the capital gains item on your entity's tax return, and a Capital gains tax (CGT) schedule 2005 if this is required.

CGT schedule

Your entity must complete this schedule for the 2004 - 05 income year if the:

• total current year capital gains are greater than $10,000, or
• total current year capital losses are greater than $10,000.

If your entity is required to complete a CGT schedule , you must attach it to your entity's 2005 tax return.

Consolidated groups

If a group consolidates during the income year, the head company must lodge a CGT schedule if the total capital gains or total capital losses that it makes - as head company of the consolidated group and while not a member of a consolidated group - are greater than $10,000.

An entity that has joined a consolidated group/s during the year of income as a subsidiary member must lodge a CGT schedule covering any periods of non-membership if the entity satisfies the requirements for lodgment of that schedule.

Detailed information on the operation of consolidation is available on our website or phone the Tax Reform Infoline on 13 24 78 .

Steps you need to take

The completion of the CGT labels on your entity's 2005 tax return involves a three-step process (for entities with capital gains or capital losses under the $10,000 threshold) or a four-step process (for entities with capital gains or capital losses over the $10,000 threshold):

Step 1	Calculate the capital gain or capital loss for each CGT event that happens during the 2004 - 05 income year using the Capital gain or capital loss worksheet.
Step 2	Calculate the net capital gain for the 2004 - 05 income year or net capital losses carried forward to later income years using the CGT summary worksheet .
Step 3	Complete the capital gains item on your entity's tax return.
Step 4	If required, complete a CGT schedule .

Step 1 - How to complete the capital gain or capital loss worksheet for each CGT event

The Capital gain or capital loss worksheet calculates a capital gain or capital loss for each separate CGT event. Do not attach completed worksheets to your entity's 2005 tax return - these are your working papers and should be kept with your entity's tax records.

There are a few things to remember when you are using the worksheet.

Firstly, you show the type of CGT asset or CGT event that resulted in the capital gain or capital loss.

Organise each of these under one of the following four categories:

• shares and units in unit trusts
• real estate
• other CGT assets (including personal use assets) and any other CGT events
• collectables.

Secondly, there are special rules that apply when working out a capital gain or capital loss for a depreciating asset. A capital gain or capital loss will only arise to the extent that a depreciating asset is used for a non-taxable purpose (for example, used privately). You calculate the capital gain or capital loss according to concepts used in the uniform capital allowance provisions. Those provisions also treat as income or allow as a deduction any gain or loss from a depreciating asset to the extent that it was used for a taxable purpose.

Thirdly, if a capital gain was made, you calculate it using:

• the indexation method (see note 2 of the worksheet ) for capital gains made on CGT assets acquired before a certain time (11.45am by legal time in the ACT on 21 September 1999) and owned for at least 12 months, or
• the discount method (see note 3 of the worksheet ) for assets owned for at least 12 months and for which you are not using the indexation method, or
• the 'other' method (if neither the indexation method nor the discount method applies).

These three methods of calculating a capital gain are explained in full in part A chapter 2 and are also listed in Definitions .

When choosing between the indexation and discount methods, the amounts at (a) and (b) at the bottom of the worksheet do not yet reflect any capital losses or CGT discount you may be able to apply. This affects your choice of the amount to transfer to the CGT summary worksheet , which you can use to calculate your net capital gain or net capital loss.

Transfer the capital gain or capital loss calculated on each Capital gain or capital loss worksheet to the CGT summary worksheet . Transfer a capital gain according to the method you used to calculate it and the type of asset that gave rise to it.

Capital gain or capital loss worksheet notes

Note 1 - CGT event

You make a capital gain or capital loss if certain events or transactions (called CGT events) happen. Most commonly, CGT events happen to a CGT asset (for example, the disposal of a CGT asset) but some CGT events can happen without involving a CGT asset. For more information about CGT events, see the Guide to capital gains tax 2005 .

Note 2 - Indexation method*

For CGT assets acquired before 11.45am (by legal time in the ACT) on 21 September 1999, the indexation of the cost base of an asset is frozen as at 30 September 1999. Individuals, trusts and superannuation entities can choose to use either the cost base indexed, frozen as at 30 September 1999, or the CGT discount.

Note - 3 Discount method*

If a CGT event happens to a CGT asset after 11.45am (by legal time in the ACT) on 21 September 1999 you acquired the asset at least 12 months before the CGT event, you may be entitled to discount the capital gain after applying capital losses. The discount percentage for an individual or trust is 50% and for a complying superannuation entity it is 33 1/3%. Companies (other than those life insurance companies and friendly societies which carry on life insurance business that are entitled to the CGT discount in respect of their complying superannuation business) are not eligible for the CGT discount. You apply current year capital losses and then unapplied net capital losses from earlier years against current year capital gains before applying the CGT discount. If any capital gains qualify for the CGT small business concessions, you then apply those concessions to each capital gain.

Note - 4 Other CGT assets and any other CGT events

This category is for a capital gain or capital loss made from a CGT asset or any other CGT event that is not from shares and units (in unit trusts), real estate or a collectable. You include capital gains from personal use assets here. If you acquired a personal use asset for $10,000 or less, you disregard any capital gain. You disregard capital losses from personal use assets.

Note: There are special rules that apply when working out a capital gain or capital loss for a depreciating asset. A capital gain or capital loss will only arise to the extent that you use a depreciating asset for a non-taxable purpose (for example, used privately). You calculate the gain or loss having regard to concepts used in the uniform capital allowance provisions. Those provisions also treat as income or allow as a deduction any gain or loss from a depreciating asset to the extent that you use it for a taxable purpose.

Note 5 - Collectables

If you acquired a collectable - for example, jewellery or an antique - for $500 or less, you disregard any capital gain or capital loss. You can only use capital losses from collectables to offset capital gains from collectables.

Note 6 - Acquisition or purchase cost

This is money you paid, property you gave or you are required to pay or give to acquire a CGT asset. The market value of any property you gave, or are required to give, is worked out at the time of acquisition. Modifications and special rules may apply to this element of the cost base - for example, the market value substitution rule.

Note 7 - Incidental costs that relate to a CGT event

This includes the incidental costs of disposal of a CGT asset or, if there is no disposal of a CGT asset, those incidental costs that relate to the CGT event.

Note 8 - Non-capital costs of ownership

Non-capital costs of ownership include interest on borrowed money, rates and land tax, and the costs of repairing or maintaining the CGT asset. You include them in the cost base provided you acquired the CGT asset after 20 August 1991. These costs cannot be indexed or used to work out a capital loss. You do not include non-capital costs of ownership in the cost base of collectables or personal use assets.

Note 9 - Cost base and reduced cost base

For the cost base, exclude all expenditure recouped or that has been deducted or can be deducted on assets acquired after 7.30pm (by legal time in the ACT) on 13 May 1997. For assets acquired before this time, exclude all expenditure recouped, or in respect of incidental costs and non-capital costs, that have been deducted or can be deducted. In some cases, cost base reductions are made before indexing (for example, recouped expenditure) and in others, after indexing (for example, capital works deductions). For the reduced cost base, exclude any expenditure recouped, that has been deducted, can be deducted or is a non-capital cost of ownership. Indexation does not apply to the reduced cost base.

Note 10 - Indexation factor

Indexation is not relevant to:

• expenditure incurred after 11.45am (by legal time in the ACT) on 21 September 1999 relating to a CGT asset acquired before that time, or
• expenditure relating to a CGT asset acquired after that time.

The cost base includes indexation, frozen as at 30 September 1999, only if you acquired the CGT asset at or before 11.45am (by legal time in the ACT) on 21 September 1999 and have owned it for at least 12 months. There are some exceptions - for example, rollovers and assets inherited from a deceased estate. Indexation is not available for non-capital costs of ownership and it is not relevant to the reduced cost base. The indexation factor is an amount equal to the consumer price index (CPI) for the quarter of the year in which the CGT event happened to the asset, divided by the CPI for the quarter of the year in which you incurred the expenditure included in any of the cost base elements (except the third element - non-capital costs of ownership). A list of CPI is at appendix 2 .

Note 11 - Capital proceeds

This is money and the market value of any property that you have received or are entitled to receive, in respect of the CGT event happening. Modifications and special rules may apply to change the capital proceeds for certain CGT events. If the capital proceeds are greater than the cost base, you make a capital gain. If the capital proceeds are less than the reduced cost base, you make a capital loss. If the capital proceeds are between the cost base, or if applicable the indexed cost base, and the reduced cost base, you make neither a capital gain nor a capital loss.

Note 12 - Capital losses

You can only use capital losses from collectables to offset capital gains from collectables. You disregard capital losses from personal use assets. You cannot deduct net capital losses from your assessable income. If you became a bankrupt during the year, you disregard unapplied net capital losses from earlier years.*

*Note: For CGT assets acquired before 11.45am (by legal time in the ACT) on 21 September 1999, you have the option of choosing the CGT discount or calculating the capital gain using indexation frozen as at 30 September 1999. Calculate your capital gain under each option to determine the best result in your particular circumstances.

Step 2 - How to complete the CGT summary worksheet

You use the CGT summary worksheet to calculate your entity's net capital gain for the 2004 - 05 income year or net capital losses carried forward to later income years. It also provides the information you need to complete the capital gains item on your entity's tax return and, if required, the CGT schedule.

You should include on this worksheet any capital gain your entity is entitled to as a distribution from a trust.

The CGT summary worksheet is designed for entities that make capital gains or capital losses during the income year. However, you may also find it useful if you are an individual (including a partner in a partnership) who has more complex CGT affairs.

The CGT summary worksheet differentiates between capital gains from active assets and non-active assets. Generally, an active asset is a business asset the entity owns - for example, goodwill of a business.

A share and an interest in a trust can also be active assets if certain conditions are met.

There are four small business CGT concessions that may apply to capital gains from active assets:

• The small business 15-year exemption: this exemption, subject to certain conditions being satisfied, means a capital gain is totally disregarded if your small business entity has continuously owned the CGT asset for at least 15 years, and:
  • you are 55 years old or over and retiring, or
  • you are permanently incapacitated.

• The small business 50% active asset reduction: this concession provides a 50% reduction of a capital gain for an active asset.
• The small business retirement exemption: this allows you to disregard capital gains for active assets (up to a lifetime limit of $500,000) if the conditions are satisfied. If you are under 55 years old and are eligible for this exemption, you must pay the amount into a superannuation (or similar) fund.
• The small business rollover: this enables you to defer a capital gain if you acquire a replacement asset and satisfy other conditions.

To find out if your business is eligible for the small business CGT concessions, see the Guide to capital gains tax concessions for small business.

Active assets

Remember that at Active assets in the CGT summary worksheet (and the CGT schedule ), you should only include a capital gain from an active asset that qualifies for one or more of the following three small business CGT concessions:

• small business 50% active asset reduction
• small business retirement exemption
• small business rollover.

If the asset does not qualify for one or more of these three concessions, include the capital gain at Non-active assets .

Limit on value of assets

The small business CGT concessions are not available if the net value of the assets of your entity and related entities just before the CGT event exceeds $5 million. If your entity is not entitled to the small business concessions, include the capital gain at Non-active assets .

Life insurance companies

Life insurance companies, including friendly societies that conduct life insurance business, need to complete two CGT summary worksheets - one for each class of income they derived (superannuation class and ordinary class income). You can only apply capital losses from one class of income against capital gains from that class of income. Combine the details from both summary worksheets onto one CGT schedule, if it is required.

The parts in this step relate to the parts of the CGT summary worksheet . Work through each relevant part to complete your worksheet.

Part A: Total current year capital gains

In part A you show your entity's total current year capital gains.

Part A1: Current year capital gains (other than capital gains from collectables)

What to include and exclude

You generally do not include any capital gain to which an exemption (for example, the small business15-year exemption) or exception applies.

However, you must include in the Active assets columns capital gains for which your entity may be exempt because it is entitled to one or more of the following:

• small business 50% active asset reduction
• small business retirement exemption
• small business rollover.

If a capital gain does not qualify for one or more of these three concessions, include it at Non-active assets .

At A to I and M to U on the worksheet, show the current year capital gains (other than from collectables) transferred from the Capital gain or capital loss worksheets.

Trust capital gains

You must also include at G to I and S to U on this worksheet any distribution from a trust of a net capital gain from a CGT event (other than one involving a collectable) that your entity is entitled to.

You must use the same method as the method used by the trustee to calculate your entity's capital gain from the trust. For example, if the trustee used the discount method to calculate a capital gain, you must use the discount method. In some cases your entity must gross up the amount of the trust capital gain. If this applies, you include the grossed-up amount at H , S , T and U , as explained below.

If the trustee used the discount method to calculate a capital gain, you need to gross it up by multiplying the distribution amount by two. Include the result at H . Grossing up ensures that any capital losses your entity has made are deducted from your entity's grossed-up capital gain before the CGT discount is applied.

If the trust's capital gain was reduced by the small business 50% active asset reduction, again it needs to be grossed-up by multiplying the distribution amount by two. Include the result at S or U .

If the trust's capital gain was reduced by the CGT discount and by the small business 50% active asset reduction, multiply the distribution amount by four and include the result at T .

Amount of capital gain

Show the full amount of all capital gains in part A1 .

Do not show the amount remaining after applying:

• capital losses (which are applied on page 4 of the worksheet at part D )
• the CGT discount (which is applied on page 6 of the worksheet at part F ), or
• the small business CGT concessions (which are applied on page 7 of the worksheet at part G ).

Transfer the amounts at A1 to A6 to the corresponding A1 to A6 in part A3 of the CGT summary worksheet .

Part A2: Capital gains and capital losses from collectables

Did your entity make a capital gain or a capital loss from a collectable during the income year? Or did the entity receive a distribution from a trust during the income year that includes a net capital gain from a collectable?

Yes	Read on.
No	Go to part A3 .

Transfer any capital gains from collectables from the Capital gain or capital loss worksheets to C1 , C2 or C3 on your CGT summary worksheet. Transfer any capital losses from collectables to C4 on your CGT summary worksheet .

If your entity was entitled to a distribution of a net capital gain from a trust resulting from a collectable, show this amount at C5 to C7 . You must use the same method as the trustee to calculate your entity's capital gain from the trust. For example, if the trustee used the discount method to calculate a capital gain, you need to do the same and show the grossed up amount at C6 .

If the trustee used the discount method to calculate a capital gain, gross it up by multiplying the distribution amount by two. Grossing up ensures that any capital losses your entity has made are subtracted from your grossed-up capital gain before the CGT discount is applied.

Show the totals of all of your entity's capital gains from collectables at C8 to C10 .

Step A2.1: Deduct any current year capital losses (CYCL) from collectables from current year capital gains (CYCG) from collectables

If your entity has any current year capital losses from collectables, deduct these from any current year capital gains from collectables. This reduces your CGT obligation. If your entity has current year capital losses from collectables that can be deducted they must be deducted here. You cannot choose to defer to a later year any amount that can be deducted this year.

Does your entity have any current year capital gains from collectables?

No	Transfer the amount at C4 to H in part I and then go to part A3
Yes	Does your entity have a CYCL from a collectible?
	No	Transfer the amounts at C8 , C9 and C10 to 1E , 1F and 1G and then go to step A2.2
	Yes	Read on

Deduct any current year capital losses from collectables (shown at C4 ) from your current year capital gains from collectables (shown at C8 to C10 ).

You can do this in the order that gives the best result, which would usually be to apply the losses against capital gains calculated using the:

• 'other' method
• indexation method
• discount method.

Show the amounts deducted from capital gains from your collectables at 1A to 1C , depending on the choice made about how to deduct the losses. Show the total losses from collectables deducted from gains from collectables at 1D .

Show any remaining capital gains from collectables at 1E to 1G .

If your entity has net capital losses from collectables ( C4 minus 1D ), you can carry this forward to reduce the capital gains from collectables in later income years. There is no time limit on how long you can carry forward this loss. Transfer the amount of net capital losses from collectables to H UNCL from collectables in part I .

Step A2.2: Apply any prior year net capital losses (PYNCL) from collectables

Prior year net capital losses are the unapplied net capital losses carried forward from earlier years.

If your entity has prior year net capital losses that can be deducted, deduct them here. You cannot choose to defer to a later year any amount that can be deducted this year.

Does your entity have any remaining current year capital gains from collectables?

No	If your entity has PYNCL, complete 2A , 2B and 2C , and transfer the amount at 2C to H in part I . Go to part A3.
Yes	Does your entity have a PYNCL from a collectables?
	No	Transfer the amounts at 1E, 1F and 1G in step A2.1 to J, K and L in part A3 and continue on from part A3 .
	Yes	Read on

At 2C , show the available prior year net capital losses from collectables after you have made any necessary adjustments for commercial debts forgiven shown at 2B . For more information on commercial debts forgiven, see Debt forgiveness and refer to your entity's tax return instructions.

Again, you can deduct PYNCL from collectables from any remaining capital gains from collectables in the manner that produces the best result. You must, however, deduct them in the order in which they were made - for example, you should deduct a 1995 - 96 year capital loss before a 1998 - 99 year capital loss.

At 2D to 2F , show the amounts of prior year net capital losses from collectables in the order you have chosen.

At 2G , show the total amount of prior year net capital losses from collectables that you have deducted from the current year capital gains from collectables.

At J , K and L in step A2.2 , show the capital gains from collectables after you have applied the current year capital losses and prior year net capital losses from collectables.

You can carry forward any unapplied net capital losses from collectables ( 2C minus 2G ) but in later income years you can only use them to reduce any capital gains from collectables (not from other CGT assets). There is no time limit on how long you can carry forward these losses.

When you have completed step A2.2 , transfer:

• the amounts at J , K and L to the corresponding labels in part A3 , and
• the amount of unapplied prior year net capital losses from collectables (referred to above) to H UNCL from collectables in part I (together with any net capital losses from collectables at step A2.1 ).

Part A3: Total current year capital gains (CYCG)

At A3 , show the total of your entity's capital gains, including any net capital gain from collectables.

Your entity may not have any of the following losses:

• current year capital losses
• prior year net capital losses, or
• capital losses transferred in.

In this case, transfer the amounts at A7 to A12 in part A3 to A to F in part E and continue from part F .

If your entity has one or more of these losses, read on.

Part B: Current year capital losses (CYCL), other than from collectables

In part B , show any current year capital losses your entity has made from:

• shares and units (in unit trusts) at A
• real estate at B , and
• other CGT assets and any other CGT events at C .

Show the total at D .

You can transfer these from your Capital gain or capital loss worksheets .

If your entity does not have any current year capital losses (other than from collectables), go to part D .

Do not include any capital loss made from personal use assets at C Other CGT assets and any other

CGT events. You disregard capital losses from personal use assets and cannot apply them to reduce capital gains.

Do not show capital losses made from collectables in part B - they should have been shown in part A2 .

Now go straight to part D - there is no part C in this worksheet.

Part D: Applying capital losses against current year capital gains

In part D , show your entity's current year capital gains reduced by:

• current year capital losses, other than from collectables (step D1)
• prior year net capital losses, other than from collectables (step D2) and
• capital losses transferred in (for companies only - step D3).

Step D1: Apply current year capital losses, other than capital losses from collectables

If your entity has current year capital losses (other than capital losses from collectables) that can be deducted, you must deduct them here. You cannot choose to defer to a later year any amount that can be deducted this year.

Have you shown current year capital gains for your entity at A7 to A12 in part D?

No	Transfer D in part B to I in part I of the worksheet, then go to step D2 .
Yes	Does your entity have CYCLs or PYNCLs, other than from a collectable, or capital losses transferred in?
	No	Transfer the amounts at A7 to A12 in part D to A to F in part E and continue on from part F .
	Yes	If your entity has CYCL, read on. If your entity has only PYNCL, transfer the amounts at A7 to A12 in part   D to 3G to 3L in step D1 and then go to step D2 . If your entity has only capital losses transferred in, go to step D3.

You can choose the order in which you deduct your entity's current year capital losses (at D in part B ) from the current year capital gains (at A7 to A12 ).

Generally, if your entity is entitled to the small business CGT concessions, it is better to reduce the non-active asset capital gains first. Within the non-active and active categories you usually get the greatest benefit by reducing:

• capital gains calculated using the 'other' method, then
• capital gains calculated using the indexation method, then
• capital gains calculated using the discount method.

At 3A to 3F , show the amounts of current year capital losses deducted in the order you have chosen with the total at H . At 3G to 3L , show the capital gains after applying (deducting) the current year capital losses.

You can carry forward net capital losses other than from collectables ( D in part B minus H ) to reduce capital gains in later income years.

When you have completed step D1 , transfer the amount of net capital losses ( D minus H ) to I UNCL from other CGT assets in part I .

Step D2: Apply any prior year net capital losses, other than PYNCL from collectables

Prior year net capital losses are the unapplied net capital losses carried forward from earlier years.

If your entity has prior year net capital losses (other than prior year net capital losses from collectables) that can be deducted, they must be deducted here.

You cannot choose to defer to a later year any amount that can be deducted this year.

Does your entity have any current year capital gain remaining?

No	If your entity has PYNCL, complete 4A , 4B , and 4C and transfer the amount at 4C to I in part I . Go to part E
Yes	Does your entity have any PYNCL, other than collectables?
	No	If your entity is a company with capital losses transferred in, go to step D3 . Otherwise, transfer 3G to 3L in step D1 to A to F in part E and continue on from part F .
	Yes	Read on

Reduce the prior year net capital losses at 4A by any adjustment for commercial debts forgiven at 4B . For more information on commercial debts forgiven, see Debt forgiveness and refer to your entity's tax return instructions.

Again, you can deduct prior year net capital losses from any remaining capital gains in the way that produces the best result. See discussion for step D1 . However, you must deduct them in the order in which they were made - for example, you must deduct a 1995 - 96 year capital loss before a 1998 - 99 year capital loss.

At 4D to 4I , show the amounts of prior year net capital losses in the order you have chosen and the total at L . At 4J to 4O , show the capital gains after you have applied the current year capital losses and prior year net capital losses.

You can carry forward any unapplied prior year net capital losses ( 4C minus L ) to reduce the capital gains in later income years. There is no time limit on how long you can carry forward these losses.

When you have completed step D2 , transfer the amount of unapplied prior year net capital losses ( 4C minus L ) to I UNCL from other CGT assets in part I (together with any net capital losses at step D1 ).

If your entity is a company with capital losses transferred in, go to step   D3 .

Otherwise, transfer the remaining capital gain amounts at 4J to 4O to A to F in part E .

Step D3: Apply any capital losses transferred in

Only follow this step if your entity is a company with capital losses transferred in.

You need to apply the capital losses transferred in to your entity in the order they were received. Your entity must have enough capital gains to absorb the capital losses transferred in.

When you have completed step D3 , transfer the amount of CYCG remaining after applying CYCL, PYNCL ( 4J to 4O in step D2 ) and capital losses transferred in to A to F in part E .

Part E: Current year capital gains after applying capital losses

In part E , show your entity's current year capital gains reduced by current year capital losses, prior year net capital losses and capital losses transferred in.

Part F: CGT discount on capital gains

In part F , apply the CGT discount.

Does your entity have a capital gain at Capital gains - discount method (B or E) in part E?

Yes	Read on
No	Go to part G

CGT discount Companies are not eligible for the CGT discount unless they are life insurance companies or friendly societies that carry on life insurance business. These companies may be entitled to the CGT discount for their complying superannuation business.

Next, calculate the CGT discount that applies to the capital gains at B and E in part E . The CGT discount percentage is:

• 331/3% for complying superannuation entities, or
• 50% for individuals and trusts.

Show the amount of the CGT discount at J and K in part F .

Show the amount of your remaining capital gains at 6A to 6F in part F .

Part G: Small business CGT concessions (other than the small business 15-year exemption)

In part G , apply the small business CGT concessions your entity is claiming. For more information about the small business CGT concessions, see the Guide to capital gains tax concessions for small business.

Is your entity eligible for the small business CGT concessions?

Yes	Read on
No	Go to part H

Show:

• the amount of your entity's small business 50% active asset reduction (SBAAR) at L to N
• the amount of your entity's small business retirement exemption (SBRE) at O to Q , and
• the amount of your entity's small business rollover (SBRO) at R to T .

Show the total amount of the small business CGT concessions your entity is claiming at 7A to 7D of part G .

Part H: Net capital gain calculation

In part H , show the amount of your entity's net capital gain.

Your entity's net capital gain is the amount remaining after applying any current year capital losses, net capital losses from prior years, capital losses transferred in, the CGT discount and any applicable CGT small business concessions.

You include a net capital gain as assessable income on your entity's tax return at the relevant item. See step 3 .

Part I: Unapplied net capital losses carried forward to later income years

In part I, show any unapplied net capital losses your entity is carrying forward. These losses will be available to reduce any capital gains in later income years.

Does your entity have any unapplied net capital losses?

Yes	Read on
No	You have completed the worksheet.

At H and I , show details of any capital losses that are unapplied (that is, that have not been used).

At H , show the unapplied capital losses from collectables only. This is the sum of:

• any current year capital losses from collectables that you have not used to reduce capital gains from collectables this income year (that is, deduct 1D in step A2.1 from C4 in part A2 ), and
• any prior year net capital losses from collectables that you have not used to reduce capital gains from collectables this income year (that is, deduct 2G in step A2.1 from 2C in step A2.2 ).

At I , show all of the other capital losses - that is, the sum of:

• the current year capital losses that you have not used to reduce capital gains (that is, deduct H in step D1 from D in part B ), and
• the prior year net capital losses that you have not used to reduce capital gains (that is, deduct L in step D2 from 4C in step D2 ).

At V , show the total of the amounts at H and I .

The amounts at H and I are the unapplied net capital losses available to be carried forward and used to reduce your capital gains in later income years.

You can only use unapplied net capital losses from collectables to reduce capital gains from collectables in later income years.

Step 3 - How to complete the capital gains item on your entity's tax return

In the earlier steps, you calculated your capital gain or capital loss for each CGT event, then worked out your net capital gain or net capital loss.

If your entity made a capital gain or capital loss during the income year:

• print Y (for yes ) at G Did you have a capital gains tax event during the year? at the capital gains item on your entity's tax return
• transfer the amount at G in part H of your entity's CGT summary worksheet to A Net capital gain on your entity's tax return, and
• add the amounts, if any, at H and I in part I of your entity's CGT summary worksheet and show the total amount at Losses information , V Net capital losses carried forward to later income years on your entity's tax return.

If you are an individual completing your Tax return for individuals (supplementary section) 2005 or a tax agent completing a tax return on behalf of an individual:

• print Y (for yes ) at G Did you have a capital gains tax event during the year? Item  17 Capital gains on your tax return (supplementary section)
• transfer the amount at Total CYCG , part A3 of your CGT summary worksheet to H Total current year capital gains item  17 Capital gains on your tax return (supplementary section)
• transfer the amount at G , part H of your CGT summary worksheet to A Net capital gain item 17 Capital gains on your tax return (supplementary section), and
• add the amounts, if any, at H and I in part I of your CGT summary worksheet and show the total at V Net capital losses carried forward to later income years item 17 Capital gains on your tax return (supplementary section).

Step 4 - How to complete the CGT schedule

Your entity must complete a CGT schedule for the 2004 - 05 income year if:

• the total current year capital gains are greater than $10,000, or
• the total current year capital losses are greater than $10,000.

Consolidated groups If a group consolidates during the income year, the head company must lodge a CGT schedule if the total capital gains or total capital losses that it makes - as head company of the consolidated group and while not a member of a consolidated group - are greater than $10,000. An entity that has joined a consolidated group/s during the year of income as a subsidiary member must lodge a CGT schedule covering any periods of non-membership if the entity satisfies the requirements for lodgment of that schedule.

If your entity is required to complete a CGT schedule, attach it to your entity's 2005 tax return. You should lodge only one CGT schedule with your entity's tax return.

If you are lodging a paper tax return and CGT schedule, please use the preprinted Capital gains tax (CGT) schedule 2005 . To get extra copies of the preprinted schedule, phone our Publications Distribution Service on 1300 720 092 .

You need to follow these instructions carefully to make sure you complete your entity's CGT schedule correctly.

You must complete all relevant parts of the CGT schedule, including parts J to N .

Print your entity's TFN, name and Australian business number in the boxes provided. The CGT schedule must be signed in the same way that the 2005 tax return is signed.

Take the following steps to transfer the relevant information from your CGT summary worksheet.

Part A

• Transfer the amounts from A to I and from M to U on your CGT summary worksheet to the corresponding labels in part A of the CGT schedule .
• Transfer the amounts at J , K and L on your CGT summary worksheet (after step A2.2 ) to the corresponding labels in part A of the CGT schedule.

Part B

Transfer the amounts at A , B , C and D on your CGT summary worksheet to the corresponding labels in part B of the CGT schedule.

Part C

There is no part C in the CGT schedule.

Part D

From step D1 on page 4 of the CGT summary worksheet :

• Add the amounts at columns 3A and 3D and transfer the total to E in part D of the CGT schedule.
• Add the amounts at columns 3B and 3E and transfer the total to F in part D of the CGT schedule.
• Add the amounts at columns 3C and 3F and transfer the total to G in part D of the CGT schedule.
• Transfer the Total CYCL applied amount at H to H in part D of the CGT schedule.

From step D2 on page 5 of the CGT summary worksheet:

• Add the amounts at columns 4D and 4G and transfer the total to I in part D of the CGT schedule.
• Add the amounts at columns 4E and 4H and transfer the total to J in part D of the CGT schedule.
• Add the amounts at columns 4F and 4I and transfer the total to K in part D of the CGT schedule.
• Transfer the Total PYNCL applied amount at L to L in part D of the CGT schedule.

From step D3 on page 5 of the CGT summary worksheet:

• Add the amounts at columns 5A and 5D and transfer the total to M in part D of the CGT schedule.
• Add the amounts at columns 5B and 5E and transfer the total to N in part D of the CGT schedule.
• Add the amounts at columns 5C and 5F and transfer the total to O in part D of the CGT schedule.
• Transfer the Total capital losses transferred in amount at P to P in part D of the CGT schedule.

Part E

Transfer the amounts at A , B , C , D , E and F of the CGT summary worksheet to the corresponding labels in part E of the CGT schedule.

Part F

Transfer the amounts at J and K of the CGT summary worksheet to the corresponding labels in part F of the CGT schedule.

Part G

Transfer the amounts at rows L to N , O to Q and R to T of the CGT summary worksheet to the corresponding labels in part G of the CGT schedule.

Part H

Transfer the amount at G of the CGT summary worksheet to G in part H of the CGT schedule.

Part I

Transfer the amounts at H and I of the CGT summary worksheet to the corresponding labels in part I of the CGT schedule.

Part J

Write the total amount of any capital gains disregarded by the small business 15-year exemption (do not apply the CGT discount) at J in part J of the CGT schedule.

Print in the box at K the code from the list below that best describes the CGT asset or CGT event from which your entity made the capital gain. If your entity made capital gains from more than one CGT asset or CGT event, select the code which best describes the type of CGT asset or CGT event that produced the largest amount of capital gain.

CGT asset or CGT event code

S	shares
U	units in unit trusts
R	real estate
G	goodwill
O	other CGT assets or CGT events not listed above

Part K

During the income year, did your entity choose scrip-for-scrip rollover when an arrangement was made to exchange original interests for replacement interests?

Original interests are shares or units or other interests (or an option, right or similar interest in a company or trust), while replacement interests are similar interests in another company or trust.

Print Y for yes or N for no at A .

If you printed Y for yes :

Write at B the amount of the cost base for all of the original interests exchanged (regardless of whether or not full rollover was available).

Write at C the total of the market value of the replacement interests acquired.

Write at D the total of the amount of cash and other considerations received. Do not include any amount already included at C .

Part L (for companies and trusts only)

Was the company or trust an 'acquiring entity' during the income year under an arrangement for which original interest holders qualified for scrip-for-scrip rollover?

Print Y for yes or N for no at E .

If you printed Y for yes , provide the information requested below for the arrangement. If interests were acquired in more than one original entity, write at F the number of original entities subject to such arrangements and provide the information requested below for the arrangement involving the greatest cost base for the interests acquired.

Show at G the TFN for the original entity.

Show at H the number of shares, units or other interests issued in exchange for the shares or units or other interests acquired in the original entity.

Show at I the number of options, rights or similar interests issued in exchange for the options, rights or similar interests acquired in the other entity.

Show at J the amount of other considerations (including cash) given to acquire the shares, units or other interests, options, rights or similar interests in the original entity.

Show at K the total of the first element of the cost bases of the shares, units or other interests, options, rights or similar interests acquired in the original entity as a result of the arrangement.

Did the company that issued replacement interests or the trustee of the trust, jointly with a significant or common stakeholder, choose to receive a rollover?

Print Y for yes or N for no at L .

If the answer at L is yes , show at M the total of the first element of the cost bases of the shares, or units or other interests, or options, rights or similar interests in the original entity (original interests) acquired directly from significant and common stakeholders for the arrangement, or issued by the original entity to the company or trust and attributable to original interests of significant and common stakeholders that were cancelled under the arrangement.

Part M (for companies only)

Did the company have an employee share scheme in place at any time during the year?

Print Y for yes or N for no at N .

Part N (for companies only)

At the end of the income year, did the company still have any assets that were acquired before 20 September 1985 and that were not treated as post- CGT assets under Division 149?

Print Y for yes or N for no at O .

After following all these steps, you have completed your entity's CGT schedule.

Remember to lodge the CGT schedule with your entity's tax return.

Do not lodge your worksheets - keep these with your own records.

ATO references:
NO NAT 4151