A business itself is not an asset for capital gains tax purposes. Rather, each asset of a business (for example, land and buildings, and goodwill and items of plant and equipment) is a separate capital gains tax asset and you must keep records for each asset. Because there may be a big gap between the time when you acquire and dispose of an asset, it is essential to keep good records from day one.
You need to keep records of everything that may be relevant to working out whether you have made a capital gain or capital loss from an asset. The main capital gains tax records you need to keep are:
- records of the date of acquisition of an asset and the acquisition cost (for example, the purchase contract)
- records of the date of disposal and any proceeds received on disposal of an asset (for example, the sales contract)
- details of commissions paid or legal expenses incurred in relation to an asset
- details of improvements made to an asset (for example, building costs), and
- any other records relevant to calculating your capital gain or capital loss.
You must keep these records for five years after you sell or otherwise dispose of an asset, unless you keep an asset register.
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