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General Exemptions for Capital Gains Tax (CGT)

 

Exemptions

Other Exemptions

CGT Assets

Disposal of a CGT Asset

Exemptions

A capital gain or capital loss you make from any of the following is disregarded:

  • a car (that is, a motor vehicle designed to carry a load of less than one tonne and fewer than nine passengers) or motor cycle or similar vehicle;
  • a decoration awarded for valour or brave conduct, unless you paid money or gave any other property for it;
  • collectables acquired for $500 or less;
  • a capital gain from a personal use asset acquired for $10,000 or less;
  • any capital loss from a personal use asset;
  • CGT assets used solely to produce exempt income or some amounts of non-assessable non-exempt income;
  • a CGT asset that is your trading stock at the time of a CGT event;
  • shares in a pooled development fund;
  • compensation or damages you receive for any:
  • wrong or injury you suffer in your occupation
  • wrong, injury or illness you or your relatives suffer
  • compensation you receive under the firearms surrender arrangements;
  • winnings or losses from gambling, a game or a competition with prizes;
  • a reimbursement or payment of your expenses (but not for the loss, destruction or transfer of an asset) under a scheme established by an Australian government agency, a local government body or foreign government agency. The scheme needs to be established under an Act or legislative instrument (for example, regulations or local government by-laws);
  • a reimbursement or payment of expenses under the Unlawful Termination Assistance Scheme or the Alternative Dispute Resolution Assistance Scheme;
  • a reimbursement or payment of your expenses under the General Practice Rural Incentives Program or the Sydney Aircraft Noise Insulation Project;
  • a reimbursement or payment made under the M4/M5 Cashback Scheme;
  • a re-establishment grant made under section 52A of the Farm Household Support Act 1992;
  • a dairy exit payment under the Farm Household Support Act 1992;
  • a sugar industry exit grant paid under the Sugar Industry Reform Program;
  • payments made under the German Forced Labour Compensation Programme (GFLCP), and certain payments or property received by Australian residents as a result of persecution during the Second World War
  • some types of testamentary gifts;
  • any capital gain or capital loss that would otherwise arise from the assignment to the Commonwealth of a right in relation to a general insurance policy held with an HIH company, the trustee of the HIH trust or a prescribed entity;
  • any capital gain or capital loss you make from rights being created in you or your rights ending in relation to the making of a superannuation agreement (as defined in the Family Law Act 1975), the termination or setting aside of such an agreement or such an agreement otherwise coming to an end;
  • any capital gain or capital loss you make from the ending of rights that directly relate to the breakdown of your marriage or de facto marriage, including if you receive cash as part of a marriage breakdown settlement;
  • any capital gain or capital loss that a complying superannuation entity makes from a CGT event happening in relation to a segregated current pension asset;
  • in certain circumstances, a general insurance policy, a life insurance policy or an annuity instrument;
  • the transfer of a superannuation interest in a small superannuation fund to another small superannuation fund on the breakdown of a marriage, but not a de facto marriage; or
  • your gain on disposal of eligible venture capital investments, if you are a qualifying investor.

Other Exemptions

You may reduce your capital gain if, because of a CGT event, you have included an amount in your assessable income other than as a capital gain. For example, if you make a profit on the sale of land that is included in your assessable income as ordinary income, you don’t also include that profit as a capital gain.

Several concessions allow you to disregard part or all of a capital gain made from an active asset you use in your small business.

You disregard any capital loss you make:

  • from the expiry, forfeiture, surrender or assignment of a lease if the lease is not used solely or mainly for producing assessable income;
  • from a payment to any entity of personal services income that is included in an individual’s assessable income under the alienation of personal services income provisions, or any other amount attributable to that income; and
  • as an exempt entity.

CGT Assets

Many capital gains tax (CGT) assets are easily recognisable – for example, land, shares in a company and units in a unit trust. Other CGT assets are not so well understood – for example, contractual rights, options, foreign currency and goodwill. CGT assets fall into three categories: collectibles, personal use assets and other assets.

Disposal of a CGT Asset

You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership doesn’t occur:

  • if you stop being the legal owner of the asset but continue to be its beneficial owner; or
  • merely because of a change of trustee.

 

Time of the event

  • when you enter into the contract for the disposal; or
  • if there is no contract – when the change of ownership occurs.

 

A capital gain or capital gain or capital loss you make is disregarded:

  • if you acquired the asset before 20 September 1985; or
  • for a lease that you granted:

– it was granted before that day; or
– if it has been renewed or extended – the start of the last renewal or extension occurred before that day.

Our dedicated team can assist you with queries relating to any capital gains or losses, as well as other legal and accounting matters. Complete and submit the express enquiry form or call us on  +61 2 9223 9166 to arrange an appointment.