Item 18 - Capital gains

 If the answer is YES the relevant amounts for total capital gains and net capital gains must be entered and if the capital gain or capital loss exceeds $10,000, a PLS Capital Gains schedule must be completed and lodged with the return.

Use the Tax Capital gains worksheet (g) to calculate the gain or loss for each asset disposal or for distributions of capital gain from trusts. Prior year losses, reductions, exemptions, etc. will be calculated and the correct values returned at the relevant labels in the return.

From 1 July 2017, if you are a Norfolk Island resident, CGT may now apply to assets acquired after 23 October 2015. CGT remains payable on Australian mainland assets. For more information see Special capital gains tax rules for Norfolk Island residents on the ATO website.

If you are an investor who acquired newly issued shares in a qualifying early stage innovation company on or after 1 July 2017, any capital gains made on these shares from a CGT event that takes place in 2017-18 will be subject to ordinary CGT treatment. However, you must disregard any capital losses made on these shares from a CGT event that takes place in 2017-18.

Answer the question Y if an exemption or rollover has been applied to any CGT event.

Exemption / Rollover Code

From 1 July 2017, two new codes have been introduced to deal with the gain or loss made from Investments in early stage investment company and venture capital limited partnership:

• Code U: Early stage investor subdivision 360A
• Code V: Venture capital investment subdivision 118F.

If more than one CGT event occurred and the Gain was rolled over or an exemption applied to it, then choose the code that reflects the largest of those transactions.

If the Tax Capital gains worksheet (g) is used, the Net capital gain will be calculated by the worksheet as the sum of all transactions, less prior year losses, discounts, exemptions and rollovers.

Alternatively, if the amount is already known it can be keyed directly at the label.

If the Tax Capital gains worksheet (g) is used this amount will be calculated as the sum of all transactions prior to applying capital losses, CGT discounts or the small business concessions, other than the 15 year exemption and exemption for part year residency on sale of a rental property.

If the Tax Capital Gains worksheet (g) is used, this amount will be calculated as the sum of all current year unapplied capital losses from Collectables and Other assets, plus any unapplied prior year losses at the beginning of the year for both categories of assets. Although the ATO does not require a breakdown of Capital losses carried forward, Tax keeps those losses in their correct categories for roll over to the next year.

If the taxpayer is an Australian resident, capital gains or capital losses made from foreign sources must be included at this item and NOT at the foreign source income item 20.

Under the FRCGW rules, foreign residents disposing of certain Australian assets may have an amount withheld from the sales proceeds they receive.

Similarly, Australian resident vendors could have amounts withheld from their sale proceeds if they:

• dispose of Australian real property with a market value of $2 million or more, without providing the purchaser with an ATO-issued clearance certificate, or

• dispose of an indirect Australian real property interest without providing the purchaser with a valid vendor declaration (resident).

If you have had amounts withheld from you during the year, you are entitled to claim a credit for those amounts paid to the Commissioner by the withholder. You claim that credit at label X.

If the taxpayer's share of any net capital gain received from a trust estate is included at this field, you need to consider the following:

• If the net capital gain has been reduced by 50 per cent under either the CGT discount or the small business 50 per cent active asset reduction (but not both), you must 'gross up' the taxpayer's share by multiplying their share of the net capital gain amount by 2.

• If the net capital gain has been reduced by 50 per cent under both the CGT discount and the small business 50 per cent active asset reduction, you must 'gross' it up by multiplying the taxpayer's share of the net capital gain amount by 4. (Refer to Subdivision 115-C ITAA of 1997.)

Any payments from the trustee out of the CGT discount amount and/or an active asset reduction amount are 'tax-deferred amounts'. If the trust estate is a unit trust or a fixed trust and the tax-deferred amount exceeds the cost base of the units or fixed interests in the trust, the taxpayer makes a capital gain equal to the excess.