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  • Acquiring CGT assets

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    Generally, you acquire a CGT asset when you become its owner. You may acquire a CGT asset as a result of:

    • a CGT event happening (for example, the transfer of land under a contract of sale)
    • other events or transactions happening (for example, a company issuing shares, where their issue is not a CGT event), or
    • applying specific rules (for example, if a CGT asset passes to you as a beneficiary when someone dies).

    Time of acquisition

    The time a CGT asset is acquired is important for three main reasons:

    • capital gains tax generally does not apply to pre-CGT assets, that is, assets acquired before 20 September 1985
    • the time determines whether the cost base of a CGT asset is indexed to take account of inflation, and the extent of that indexation (see chapter 2), and
    • the time also determines whether you are eligible for the CGT discount - for example, one requirement is that you need to have owned a CGT asset for at least 12 months (see chapter 2).

    If you acquire a CGT asset as a result of a CGT event, certain rules determine when you are taken to have acquired the asset. These rules depend on which CGT event is involved. For example, if you enter into a contract to purchase a CGT asset, the time of acquisition is when you enter into the contract. If someone disposes of an asset to you without entering into a contract, you acquire the asset when you start being the asset's owner. If a CGT asset passes to you as a beneficiary of someone who has died, you acquire the asset on the date of their death.

    If you acquire a CGT asset without a CGT event happening, different rules apply to determine when you acquire the asset. If, for example, a company issues or allots shares to you, you acquire the shares when you enter into a contract to acquire them or, if there is no contract, at the time of their issue or allotment.

    Becoming a resident

    Special capital gains tax rules apply to assets you own when you become a resident of Australia. You are taken to have acquired the assets at the time you became a resident.

    This rule does not apply to pre-CGT assets or to assets that have a necessary connection with Australia, for example, land or a building in Australia, a share in a company resident in Australia, or a unit in a resident unit trust.

    Last modified: 31 Aug 2010QC 16195