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  • Time of the CGT event

    It's important to establish the timing of a capital gains tax (CGT) event because it tells you 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. For example, in the case of real estate, the CGT event generally occurs when you enter in to 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 to sell

    In June 2018, Sue entered into a contract to sell land. The contract settled in October 2018.

    Sue made the capital gain in the 2017–18 year (the income year she entered into the contract), not the 2018–2019 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 2018. He received a payment under an insurance policy in October 2018. The CGT event happened in October 2018.

    End of example

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    Last modified: 25 Sep 2020QC 52166