THE Australian Tax Office (ATO) is reminding taxpayers to declare their capital gains and to keep good records if renting out part of their property to ensure they are meeting their tax obligations.
Capital gains tax (CGT) comes into effect when you dispose of assets such as shares, crypto, managed investments or properties.
To ensure you are meeting your obligations and paying the right amount of tax, you need to calculate a capital gain or capital loss for each asset you dispose of unless an exemption applies.
“Don’t fall into the trap of thinking we won’t notice if you sell an asset for a gain and don’t declare it,” ATO assistant commissioner Tim Loh said.
According to the ATO, main residences are exempt from CGT, but this exemption does not apply in full if part of the home is rented or if the home is used to run a business.
“Generally, your main residence is exempt from CGT, however if you have used your home to produce income, such as renting out all or part of it through the sharing economy, for example Airbnb or Stayz, or running a business from home, then CGT may apply,” Mr Loh said.
The ATO have stressed the importance of keeping records of the income-producing period and the portion of the property used to produce income to calculate your capital gain.
To work out their assessable capital gain or loss the ATO suggests taxpayers calculate the proportion of the floor area that was set aside for rental or to run a business, the period it was used for that purpose, and the capital gain or loss on the home since it first started being used for rental or business.
