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  • What is a CGT event?



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

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    CGT events are the different types of transactions or events that may result in a capital gain or capital loss. Many CGT events involve a CGT asset; some relate directly to capital receipts (capital proceeds).

    You need to know which type of CGT event applies in your situation because it affects how you calculate your capital gain or capital loss and when you include it in your net capital gain or net capital loss.

    The range of CGT events is wide. Some happen often and affect many people while others are rare and affect only a few people. There is a summary of the various types of CGT events at appendix 1.

    The most common CGT event happens if you dispose of a CGT asset to someone else - for example, if you sell it or give it away, including to a relative.

    If you are registered for GST, or required to be registered for GST, a GST liability may also arise when you dispose of a business asset.

    A CGT event also happens when:

    • an asset you own is lost or destroyed (the destruction may be voluntary or involuntary)
    • shares you own are cancelled, surrendered or redeemed
    • you enter into an agreement not to work in a particular industry for a set period of time
    • a trustee makes a non-assessable payment to you from a managed fund or other unit trusts
    • a company makes a payment (not a dividend) to you as a shareholder
    • a liquidator or administrator declares that shares or financial instruments you own are worthless
    • you receive an amount from a local council for disruption to your business assets by roadworks
    • you stop being an Australian resident
    • you enter into a conservation covenant, or
    • you dispose of a depreciating asset that you used for private purposes.

    Subdividing land does not result in a CGT event if you retain ownership of the subdivided blocks. Therefore, you do not make a capital gain or a capital loss at the time of the subdivision.

    Australian residents make a capital gain or capital loss if a CGT event happens to any of their assets anywhere in the world. As a general rule, non-residents make a capital gain or capital loss only if a CGT event happens to a CGT asset that has a 'necessary connection with Australia'.

    Non-Australian residents may also make a capital gain or capital loss where CGT events create:

    • contractual or other rights (CGT event D1), or
    • a trust over future property (CGT event E9).
    Order in which CGT events apply

    If more than one CGT event can happen, you use the one that is most specific to your situation.

    Time of the CGT event

    The timing of a CGT event is important because it determines in which income year you report your capital gain or capital loss.

    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 2006, Sue enters into a contract to sell land. The contract is settled in October 2006.

    Sue makes the capital gain in the 2005-06 income year (the year she enters into the contract), not the 2006-07 income year (the year settlement takes place).

    End of example

    If 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 2005. He received a payment under an insurance policy in October 2005. The CGT event happened in October 2005.

    End of example

    The CGT events relating to shares and units, and the times of the events, are dealt with in chapter 5.

    Last modified: 21 Apr 2020QC 18504