You may already be aware of the requirement to keep your records relating to your taxation affairs for 5 years (7 years for companies). However, you must also keep records of everything that affects your capital gains and capital losses. Penalties may apply if you do not keep the records for at least five years after the final relevant Capital Gains Tax (CGT) event relating to each particular asset.

Keeping adequate records of all expenditure will help you correctly work out the amount of capital gain or capital loss you have made when a CGT event happens. It will also help make sure you do not pay more CGT than is necessary.

If you have applied a net capital loss, you should generally keep your records of the CGT event that resulted in the loss for four years from the income year when the net capital loss is fully applied. For example, say you bought some shares in 2009 and then sold those shares in 2012 and made a capital loss on the sale. Then in 2018 you made a capital gain on the sale of more shares, and you reduced some or all of this gain by the carried forward capital loss from 2012. You would need to keep records of the purchase in 2009 and the capital loss in 2012 for four years after it is applied to a capital gain, therefore until 2022.

Keeping good records can help your beneficiaries reduce the impact of CGT after your death. If you leave an asset to another person, the asset may be subject to CGT when a CGT event happens to that asset in the future – for example, if your daughter (the beneficiary) sells the shares (the asset) you have left her in your will.