• Time of the CGT event

    It's important to establish the timing of a capital gains tax (CGT) event because it tells you in which income year to report your capital gain or loss, and may affect how you calculate your tax liability.

    If you dispose of a CGT asset, the CGT event usually happens when you enter into the contract for disposal. In the case of real estate, for example, the CGT event generally occurs when you enter into the contract – that is, the date on the contract, not when you settle. If there's no contract, the CGT event generally happens when you stop being the asset's owner.

    If your CGT asset is lost or destroyed, the CGT event happens when you first receive compensation for the loss or destruction. If you don't receive any compensation, the CGT event happens when the loss is discovered or the destruction occurred.

    Example: Contract

    In June 2016, Sue entered into a contract to sell land. The contract settled in October 2016.

    Sue made the capital gain in the 2015–16 year (the income year she entered into the contract), not the 2016–17 year (the income year settlement took place).

    End of example

     

    Example: Insurance policy

    Laurie owned a rental property that was destroyed by fire in June 2015. He received a payment under an insurance policy in October 2015. The CGT event happened in October 2015.

    End of example

    See also:

    Last modified: 17 Jul 2017QC 52166