If more than one CGT event could apply to your transaction or circumstances, the most relevant CGT event applies.
Time of the CGT event
The timing of a CGT event is important because it tells you in which income year a capital gain or capital loss from the event affects your income tax.
If you dispose of a CGT asset to someone else, the CGT event happens when you enter into the contract for disposal. If there is no contract, the CGT event generally happens when you stop being the asset's owner.
Example: Contract
In June 2002, Sue enters into a contract to sell land. The contract is settled in October 2002.
Sue makes the capital gain in the 2001-02 income year when she enters into the contract and not the 2002-03 income year when settlement takes place.
End of exampleIf a CGT asset you own is lost or destroyed, the CGT event happens when you first receive compensation for the loss or destruction. If you do not receive any compensation, the CGT event happens when the loss is discovered or the destruction occurred.
Example
Insurance policy Laurie owned a rental property that was destroyed by fire in June 2001. He received a payment under an insurance policy in October 2001. The CGT event happened in October 2001.
End of exampleThe CGT events relating to shares and units, and the times of the events, are dealt with in chapter 5.