A simple system, maintained consistently from the start, prevents most of these problems. The goal is not elaborate organisation. It is having the right information available when you need it without reconstructing years of history from bank statements and email.
Key takeaway
The ATO requires investors to keep records for each investment for five years from the date of disposal. For each CGT asset, records must support the calculation of cost base and any adjustments, the date acquired, and the date and proceeds of disposal.
This is general educational content, not tax advice. ATO requirements can change. Consult a registered tax agent for guidance specific to your situation.
What the ATO Requires#
Australian tax law requires investors to keep records that allow them to calculate their capital gains and losses correctly.¹ For CGT assets (which includes shares, ETFs, and investment property), the minimum records include:
- Date of acquisition and how the asset was acquired
- Cost of acquisition, including incidental costs such as brokerage
- Date of disposal and method
- Proceeds of disposal, including any deductions (such as brokerage on sale)
- Records of any cost base changes (including AMMA cost base adjustments for ETFs)
Records must generally be kept for five years after the relevant tax return is lodged. For carry-forward capital losses, the clock runs from the year of acquisition, which can mean keeping records for much longer if an asset is held for many years.
The Three-Folder Structure#
A practical system does not need to be sophisticated. Three folders (physical or digital) cover most investor needs:
Folder 1: Transaction Records#
Everything related to buying and selling:
- Brokerage contract notes for every purchase and sale
- DRP (distribution reinvestment plan) statements showing units acquired and the price paid
- Corporate action notices (splits, mergers, rights issues) that affect cost base
Keep these sorted by investment name and date. If you use a broker with a transaction history portal, download confirmations regularly rather than relying on the portal remaining accessible indefinitely.
Folder 2: Annual Tax Statements#
Tax documents received each year for each holding:
- AMMA statements (AMIT member annual statements) from each ETF or managed fund
- Dividend statements from direct share holdings
- DRP statements if distributions were reinvested
- Any corrected or amended statements issued by fund managers
Keep these sorted by financial year and by investment name within each year.
Folder 3: Cost Base Records#
A running record of the current cost base for each holding. This is the most important folder and the one most often neglected.
The cost base record should be a simple spreadsheet (or an equivalent digital document) with at minimum:
| Column | Description |
|---|---|
| Investment Name | Fund name or ASX ticker |
| Parcel Number | Sequential number if multiple purchases |
| Date Acquired | Date of purchase or DRP |
| Units | Number of units in this parcel |
| Cost Per Unit | Including brokerage |
| Total Cost Base | Units × cost per unit |
| Adjustments | Annual AMMA adjustments recorded here |
| Current Cost Base | Updated after each adjustment |
A Spreadsheet Template in Practice#
Here is an example showing how a single investment with multiple purchases would look:
Investment: VGS (Vanguard MSCI Index International Shares ETF)
| Date | Event | Units | Price | Brokerage | Cost Per Unit | Total Cost Base |
|---|---|---|---|---|---|---|
| 15/02/2023 | Purchase | 100 | $95.00 | $9.50 | $95.095 | $9,509.50 |
| 01/08/2023 | DRP | 3 | $92.50 | $0 | $92.50 | $277.50 |
| 30/06/2024 | AMMA adj. | – | – | – | −$0.18/unit | −$18.54 total |
| 20/11/2024 | Purchase | 50 | $105.00 | $9.50 | $105.19 | $5,259.50 |
After the AMMA adjustment on 30/06/2024, the Parcel 1 cost base changes:
- 100 units × $95.095 = $9,509.50
- Less: 100 × $0.18 = $18.00 adjustment (allocated to Parcel 1 only, as it was the only parcel held at the time)
- Updated Parcel 1 cost base: $9,491.50
The DRP parcel (3 units at $92.50) is a separate parcel with its own cost base of $277.50.
What to Do Each Year (After Receiving AMMA Statements)#
After the financial year ends (30 June), ETF providers typically issue AMMA statements between August and October.
On receipt of each statement:
- Confirm the units held as at 30 June match your records.
- Note the total cash distributions received.
- Record the taxable income components (these go into your tax return).
- Check for any cost base adjustments (downward or upward).
- Apply the per-unit adjustment to each parcel of that investment held during the year.
- Update the cost base spreadsheet accordingly.
This annual update takes approximately five minutes per investment if records are current. It takes hours if records have lapsed and need to be reconstructed.
Special Cases That Add Complexity#
Dividend Reinvestment Plans (DRPs)#
Each DRP acquisition creates a new parcel. Over many years, a portfolio that participates in DRPs for multiple investments can accumulate dozens of small parcels. Each parcel needs to be tracked with its own acquisition date and cost base.
Options for managing DRP complexity:
- Track each DRP acquisition as a separate parcel (precise but labour-intensive)
- Use portfolio tracking software that handles this automatically
- Periodically consolidate DRP parcels in your records (noting this is an administrative simplification, not an ATO-approved parcel aggregation)
Corporate Actions#
Company reorganisations, mergers, spin-offs, and rights issues can affect cost base in complex ways. The ATO and the company's share registry typically issue guidance on how to calculate the cost base outcome. Keep all notices received and document the cost base treatment applied.
Multiple Brokers#
If you hold the same investment across multiple broker accounts, each purchase is still a separate parcel but tracking becomes more complex if statements are held in different systems. A single consolidated spreadsheet (drawing from multiple broker transaction histories) is usually more reliable than relying on each broker's own reporting.
Switching ETFs#
When you sell one ETF and buy another, the sale creates a CGT event that must be recorded. The purchase of the new ETF starts fresh as a new parcel. The date of purchase and cost base for the new holding begin from zero, unrelated to the old holding.
Digital Tools and Software#
Portfolio tracking software can automate much of this process:
- Sharesight (sharesight.com): Australian-based, integrates with many brokers, handles DRP tracking, can produce CGT reports and AMMA-sourced tax reports. Free plan available; paid plans for full CGT functionality.
- Navexa (navexa.io): Similar functionality, strong AMMA integration for tax reporting.
- Broker-provided reports: Most Australian brokers provide annual tax statements and some provide CGT parcel reports. These vary significantly in quality and completeness. They are generally accurate for purchase records but may not incorporate AMMA cost base adjustments automatically.
Software tools are reliable only if the underlying data is correct. If brokerage confirmations are missing, DRP acquisitions are unrecorded, or AMMA adjustments have never been imported, the software's output is unreliable.
A hybrid approach, maintaining a manual spreadsheet for the cost base record and using software for broader portfolio tracking, combines the reliability of self-maintained records with the convenience of automated data feeds.
What Happens Without Records#
If you sell an investment and cannot calculate the cost base accurately:
- You may overstate a gain and overpay tax.
- You may understate a gain and face an ATO audit correction with interest and potentially penalties.
- You may be unable to claim the 12-month CGT discount if you cannot prove the acquisition date.
- Carry-forward capital losses that were never recorded may be lost.
The ATO has the power to issue a default assessment where records are inadequate, which typically produces an unfavourable outcome for the taxpayer. Maintaining records consistently is far less costly than reconstructing them later under audit pressure.
Summary#
A practical investment record-keeping system requires three elements: transaction records (brokerage confirmations and DRP statements), annual tax statements (AMMA and dividend statements), and a running cost base record updated annually from AMMA adjustments. The ATO requires records to be kept for at least five years after the relevant tax return, which in practice means maintaining records for the full holding period and beyond. Records can be maintained in a spreadsheet, supported by portfolio tracking software, or a combination of both. The annual post-AMMA update takes minutes per investment when records are current. Neglecting this task does not eliminate the liability; it simply makes it harder to calculate correctly when a sale eventually occurs.
Sources#
- Australian Taxation Office. (2024). Keeping records for investments. https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/keeping-records-for-investments
- Australian Taxation Office. (2024). Record-keeping for tax. https://www.ato.gov.au/individuals-and-families/your-tax-return/how-to-lodge-your-tax-return/record-keeping-for-your-tax-return
- Australian Securities and Investments Commission. (2024). Managed investment schemes: keeping financial records. https://asic.gov.au/for-finance-professionals/registered-liquidators/a-guide-to-the-regulation-of-managed-investment-schemes/keeping-financial-records/