Introduction to capital gains tax

Timing of a real estate CGT event

In the case of the sale or other disposal of real estate, the time of the event is:

when you enter into the contract (generally the date on the contract), not when you settle - the fact that a contract is subject to a condition, such as finance approval, generally does not affect this date
when the change of ownership occurs if there is no contract, or
if the real estate is compulsorily acquired - the earliest of

when you received compensation from the acquiring entity
when the entity became the property's owner
when the entity entered the property under a power of compulsory acquisition, or
when the entity took possession of the property under that power.

Although you must include your capital gain or capital loss in the income year in which the contract was made, you are not required to do this until settlement occurs. If settlement occurs after you have lodged your tax return and been assessed for the relevant income year, you will have to request an amendment.

A liability for shortfall interest charge (SIC) can arise due to an amended assessment for a capital gain. We generally remit it in full if the request for amendment is lodged within a reasonable time after settlement (considered to be one month in most cases). However, remission is not automatic, you must request it and we consider each request on a case-by-case basis. If you consider that the SIC should be remitted, you should provide your reasons when you request the amendment to your assessment.

Example: Sale contract

Sue enters into a contract to sell land in June, the last month of the income year. The contract is settled in October, in the next income year.

Sue makes the capital gain in the income year she enters into the contract, not the next income year when settlement takes place.

Capital gains tax - home

Sections within Your home and other real estate

Last Modified: Wednesday, 30 January 2013