Did you know that if you bought an asset on 20 September 1985 you are still required to hold records of purchase for taxation purposes?
In fact you are required to hold those purchase records until five years after the year in which the asset is sold.
What about if you own shares and reinvest the dividends?
Each reinvestment is another purchase for CGT purposes. Therefore a record of each should also be kept (please note we do have means of reconstructing these transactions but keeping records does make it easier).
But what happens when someone dies?
Generally the CGT liability for any assets owned by the deceased passes on to the beneficiaries i.e. it doesn’t disappear.
It is therefore the responsibility of the executors of the estate to ensure purchase records are kept because they will be needed for estate tax purposes or the beneficiaries will require them for their future tax purposes.
We recently had a case where the executors were unaware of these requirements and disposed of records.
We were then left with the onerous (and costly) task of having to reconstruct purchase records.
This article appeared in our October 2019 newsletter and the author is Stephen Mason.