• Attention

    We’re currently updating this page to make it easier for you to find the information you need. During this time, you might find some links are broken. We’re working to resolve these and any other issues as quickly as possible. Thank you for your patience.

    End of attention

    Including termination and exit fees in cost base calculations

    What is a termination or exit fee?

    A termination or exit fee is a fee charged by a third party because your capital gains tax (CGT) asset is ending. This will generally happen when your asset is a contract or a right you hold against another entity or person and you end that contract.

    Example

    Linda decided to buy an investment property off the plan for $500,000. She entered into a contract with Gold Property Developments Ltd (Gold) on 1 March 2015.

    The contract with Gold contained a termination clause stating that if, for any reason, Linda did not fulfil the conditions of the contract, she would have to pay a termination fee equal to 2% of the purchase price of the property.

    On 3 September 2015, Linda ended her contract with Gold because she could no longer continue with the purchase of this property. Gold charged Linda $10,000 as a termination fee for ending the contract (2% of $500,000 is $10,000).

    Linda paid a 10% deposit on entering into the contract, so Gold returned $40,000 to Linda and retained $10,000 as the termination fee.

    End of example

    A termination fee can be charged by withholding the identified amount from the amount returned back to you.

      Last modified: 21 Jun 2016QC 24175