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  • Timing of a real estate CGT event

    When you sell or otherwise dispose of real estate, the time of the event (when you make a capital gain or loss) is usually when one of the following occurs:

    • You enter into the contract (the date on the contract), not when you settle. The fact that a contract is subject to a condition, such as finance approval, generally doesn't affect this date.
    • The change of ownership occurs if there is no contract – such as when a property passes to a beneficiary.
    • The real estate is compulsorily acquired – the time of the event is earliest of
      • when you receive compensation from the acquiring entity
      • when the entity became the property's owner
      • when the entity enters the property under a power of compulsory acquisition or takes possession under that power.

    Although you report your capital gain or loss in the tax return for the income year in which the contract is entered into, you're not required to do this until settlement occurs. If settlement occurs after you've lodged your tax return and been assessed for the relevant income year, you'll have to request an amendment.

    You may be liable for shortfall interest charge (SIC) because of an amended assessment for a capital gain. We generally remit the SIC in full if the request for amendment is lodged within a reasonable time after the settlement (considered to be one month in most cases).

    However, remission is not automatic – you must request it in writing, which can be online, by mail or fax. We consider each request on a case-by-case basis. If you consider that the shortfall interest charge should be remitted, you should provide your reasons when you request the amendment to your assessment.

    Example: Sale contract

    Aiko 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.

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

    End of example

    See also:

    Last modified: 23 Jul 2020QC 22167