Generally speaking, capital gains and losses arise when a taxpayer disposes of CGT assets.
From a compliance perspective, taxpayers are required to keep detailed records of capitals gains and losses, including details of asset acquisitions and disposals. This requirement has become much more demanding under tax consolidation, where the tax cost of an entity’s assets can be changed (reset) when that entity joins a consolidated group.
Under Taxation Ruling TR2002/10, the ATO specifies the minimum requirements for the use of asset registers to maintain CGT records. For land and depreciable assets, traditionally companies have maintained a tax asset register in parallel with their book fixed asset register, and used this data for CGT purposes. However many fixed asset registers were not built to handle the tax cost adjustments required by tax consolidation, requiring manual workarounds and separate systems (often spreadsheets) to capture this information.
CGT systems need to integrate with tax-effect accounting systems in order to determine the temporary differences and deferred tax balances of assets held for resale under IFRS.