ta121000

Division 121—Record keeping

Guide to Division 121

121-10 What this Division is about

You must keep records of matters that affect the capital gains and losses you make. You must retain them for 5 years after the last relevant CGT event.

Table of sections

Operative provisions

121-20 What records you must keep

121-25 How long you must retain the records

121-30 Exceptions

[This is the end of the Guide.]
Operative provisions

121-20 What records you must keep

(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: There are exceptions: see section 121-30.

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) 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.

(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.)

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

(b) in the case of an act—who did it; and

(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.

(5) If the necessary records of an act, transaction, event or circumstance do not already exist, you must create them or have someone else create 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 by an appropriately qualified person.

Penalty: 30 penalty units.

121-25 How long you must retain the records

(1) You must retain records that section 121-20 requires you to keep.

(2) You must retain them until the end of 5 years after it becomes certain that no *CGT event (or no further *CGT event) can happen such that the records could reasonably be expected to be relevant to working out whether you have made a *capital gain or *capital loss from the event.

(3) This section has effect despite subsection 262A(4) of the Income Tax Assessment Act 1936 (which requires records to be retained for a different period).

(4) However, it is not necessary to retain records:

(a) if the Commissioner notifies you that you do not need to retain them; or

(b) for a company that has been finally dissolved.

Penalty: 30 penalty units.

121-30 Exceptions

You do not need to keep records under section 121-20 if:

(a) for each *CGT event (if any) that has happened such that the records are relevant (or could reasonably be expected to be relevant) to working out whether you have made a *capital gain or *capital loss from the event; and

(b) for each *CGT event that may happen in the future such that the records could reasonably be expected to be relevant to working out whether you might make a *capital gain or *capital loss from the event;

any capital gain or capital loss you made (or might make) from it is to be (or would be) disregarded.

Income Tax Assessment Act| Apprentice Tax Practitioner Program