Income Tax Assessment Act 1997



Division 104 - CGT events  

Subdivision 104-H - Special capital receipts  

SECTION 104-150   Forfeiture of deposit: CGT event H1  

CGT event H1 happens if a deposit paid to you is forfeited because a prospective sale or other transaction does not proceed.

The payment can include giving property: see section 103-5 .


You decide to sell land. Before entering into a contract of sale, the prospective purchaser pays you a 2 month holding deposit of $1,000.

The negotiations fail and the deposit is forfeited.


The amount of the deposit is reduced by any part of the deposit that is:

(a) repaid by you; or

(b) compensation you paid that can reasonably be regarded as a repayment of all or part of the deposit.

The payment can include giving property: see section 103-5 .


However, the deposit is not reduced by any part of the payment that you can deduct.

The time of the event is when the deposit is forfeited.

You make a capital gain if the deposit is more than the expenditure you incur in connection with the prospective sale or other transaction. You make a capital loss if the deposit is less .

The expenditure can include giving property: see section 103-5 . However, it does not include an amount you have received as *recoupment of it and that is not included in your assessable income.


To continue the example: if you gave a lawyer wine worth $400 in connection with the prospective sale, you make a capital gain of:

$1,000   -   $400   =   $600


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