Pre-CGT assets on the radar: why reporting exempt disposals matters

For clients navigating the ever-evolving compliance landscape, even exempt capital gains events require a proactive approach.  A prime example is the disposal of pre-CGT assets, those acquired before 20 September 1985.  While these assets are exempt from CGT, the ATO advises clients to report these disposals in their tax returns to avoid unnecessary scrutiny.

What’s the rule?

Pre-CGT assets are generally exempt from CGT.  However, when clients dispose of them, the event should still be included in the tax return under the CGT exemptions and rollovers question, specifically selecting:

Option J: Capital gains disregarded as a result of the sale of a pre-CGT asset

Why report if it’s exempt?

Even though no CGT is payable, the ATO’s increasing use of data matching and transaction reporting means unreported disposals, especially of high-value assets, can trigger compliance alerts.  Including these events in the return:

• prevents unnecessary reviews or follow-ups;
• demonstrates good record-keeping and transparency; and
• reinforces your client’s compliance history.

Key takeaways

• always check the acquisition date of disposed assets;
• confirm whether the asset is pre-CGT;
• report the disposal using Option J; and
• keep clear records of supporting documentation.

ATO isn’t just focused on what tax is payable, they’re watching for what’s not being reported at all.  Stay ahead by reporting exempt pre-CGT disposals and helping your clients stay off the review radar.