CGT Event A1

What is CGT event A1?  

CGT event A1 addresses a situation where a taxpayer disposes of a CGT asset.  

A taxpayer disposes of a CGT asset where there is a change of ownership over the CGT asset.   

There will generally not be a disposal where the taxpayer ceases to be the legal owner but remains the beneficial owner. 

Also, there will generally not be a disposal where the CGT asset is held by the trustee of a trust, and the person acting as trustee changes. 

The time of CGT event A1 

CGT event A1 happens at the time when the relevant contract (addressing disposal of the asset) is entered into.  

Technically, this could be at the time of an oral contract, if the legal requirements for an oral contract (e.g. offer, acceptance and consideration etc.) are satisfied before the time of the written contract, if there is one.  

Note that even if the contract is conditional on certain matters or subject to variation, the date of contract remains the relevant time at which CGT event A1 is triggered. However, if a condition is a condition precedent to the formation of the contract, then the CGT event will not occur until the condition is satisfied that enables the formation of the contract.  

If there are multiple contracts that affect the rights and obligations of parties concerning disposal of the CGT asset, the relevant contract (which will inform the date CGT event A1 is triggered) is the one which provides the primary source of the obligation to effect the disposal of the asset.    

If there is no oral or written contract which addresses disposal of the CGT asset, the CGT event happens at the time there is a change in ownership. This could be when the asset is delivered, transmitted, or entered into.  

In respect of compulsory acquisition, the timing of CGT event A1 will be at the earliest of any of the following:  

  • At settlement or on change of ownership. 
  • When compensation is paid.  
  • When the asset is entered upon.  
  • When possession is taken.   

The reason the timing of a CGT event trigger is worth determining is that it may have substantial tax implications for the relevant taxpayer. For example, it may have an impact on whether the taxpayer will be eligible for the CGT discount by satisfying the 12 month rule. It may also have an impact on the income year in which the capital gain must be accounted for. Depending on:  

  • the taxpayers marginal rate for that income year,  
  • the amount of any other capital gains recognised,  
  • and the availability of any capital losses which may be applied against he capital gains, 

the year a capital is recognised may have a significant bearing on the effective rate of tax applied against a capital gain.  

Note that although CGT event A1 generally occurs at the time of contract, the capital gain or loss should only be determined once there is actual change of ownership. For example, in relation to the transfer of real property this would be at the time of settlement.  

If the change of ownership happens during an income year following the year of contract, the previous tax return (which will not have recognised a capital gain or loss) will need to be amended to account for the relevant capital gain or capital loss.   

Note that amendments to a tax return can attract late payment interest. However, the ATO practice as expressed in Taxation Determination 94/89 is to waive such interest if the relevant amendment is made within a reasonable period after settlement (according to the ATO, within 30 days).  

A fixed asset, often referred to as a long term tangible asset.

How to calculate the capital gain or capital loss?  

There will be a capital gain if the capital proceeds from the CGT event happening to the CGT asset exceed the cost base of the asset. There will be a capital loss if the capital proceeds are exceeded by the reduced cost base of the asset.  

Remember that there are a number of elements of costs that can be included in the cost base and capital proceeds of the asset. It is not simply the case that the cost base of an asset equals the purchase price and the capital proceeds equals the sale price.  

The greater the cost base (and lower the capital proceeds), the lower the capital gain. Therefore, it is in the taxpayer’s interest to keep appropriate records to track and support costs which are not immediately deductible, but which may be added to the cost base of a CGT asset.   

Note that the method for the calculation of a capital gain is modified if there is an earnout arrangement. This is because the capital proceeds from the sale will be unknown at the time of the CGT event (because the consideration ultimately provided in respect of the disposed asset is contingent on future matters). Refer to other BrisTax articles which address this topic.  

Examples of CGT event A1 

Instances where CGT event A1 may occur include:  

  • The sale of an asset.  
  • The vesting of an asset in a statutory trustee in order to facilitate the sale of that asset. Refer to Interpretative Decision 2009/129 for further information.  
  • The gifting of an asset.  
  • If a trustee no longer holds an asset as trustee but holds the asset in a personal capacity. Refer to Interpretative Decision 2010/72 for further information.  

Examples where CGT event A1 does not occur  

CGT event A1 will not typically occur in the following scenarios, as there is no change of ownership: 

  • The contract of sale or transfer is terminated or not completed.  
  • The contract of sale or transfer is determined to be void. Refer to Taxation Ruling 94/29 for further information.    
  • The merging of two or more CGT asset into a single CGT asset. Refer to Taxation Determination 2000/10 for further information. 
  • The split or change of a CGT asset.  
  • Joint tenants converting their interest ownership interest to tenants in common (in equal shares) or vice versa.  
  • The transfer of an asset from the legal owner to a person absolutely entitled to the asset against the legal owner. Refer to section 106-50 of the ITAA 1997 for further information. 
  • The creation of a bare trust by the transfer of an asset to a trustee.  
  • The taxpayer becoming mentally incapacitated and their assets consequently vesting in a trustee.  
  • The taxpayer becoming bankrupt and their assets consequently vesting in a trustee or, in the case of company, in the liquidator. 
  • The process where a partnership converts into a limited partnership. Refer to Interpretative Decision 2010/210 for further information.  
  • The process where a co operative converts into an unlisted public company. Refer to Class Ruling 2008/68 for further information.  
  • The disposal of an asset to issue or redeem a security.  

Keep in mind that an alternative CGT event may apply in some of these above scenarios.

Business accountant or banker, businessman calculate and analysis with stock financial.

Which entity experiences the CGT event?  

The taxpayer disposing of the CGT asset will be taxed on capital gains.  

The entity acquiring the CGT asset is not taxed at the time of acquisition. However, if the acquiring entity holds the asset on capital account, the eventual disposal of the asset (or the happening of another event that triggers a CGT event) will attract CGT.  

When is a CGT asset held on revenue account?   

If a CGT asset is held on revenue account (i.e. as an asset held in respect of an isolated profit making transaction or as an asset held as trading stock), the tax law will prioritise the application of the relevant revenue rules. 

It is worth noting that there is anti overlap provision in section 118-20 of the ITAA 1997 which is designed to prevent double taxation in these instances by ensuring that CGT assets which are held on revenue account are not taxed twice. That is, firstly under the relevant revenue recognition section (e.g. section 6-5 of the ITAA 1997, section 15-15 of the ITAA 1936, section 25A of the ITAA 1936, or under Division 70 of the ITAA 1997 in relation to trading stock) and secondly under the CGT regime.  

The potential application of the revenue rules to CGT assets (with priority over the CGT regime) should be considered closely. See other BrisTax articles for further details on the distinction between the treatment of assets held on revenue account versus capital account.  

The identification of CGT assets

In practice, the matching process between CGT assets disposed and CGT assets acquired can be challenging. The difficulty arises where a taxpayer acquires multiple versions of a similar CGT asset.  

The most obvious example would be a taxpayer acquiring shares in a particular company (X Co). Assume the taxpayer starts a new income year by committing to the acquisition of 1 share in X Co every week. Over the course of an income year, the taxpayer will have acquired 52 shares in X Co. The difficulty of matching can be easily observed where the taxpayer, on the last day of the income year, decides to sell half of the shares held (26). Which 26 of the total 52 shares held before disposal should be matched to the 26 shares disposed?  

The problem is not limited to shares. The matching problem will often be present difficulties for taxpayer’s who hold trust units and crypto.   

The matching problem is exacerbated where there is a high volume of transactions (i.e. buys and sells of similar CGT assets) throughout the course of an income year and over the span of multiple income years.  

For example, following on from the example above, assume the taxpayer instead acquired and disposed of shares as follows:  

  • Year 1, Week 1: Acquired 7 share in X Co.  
  • Year 1, Week 2: Acquired 2 shares in X Co, then separately acquired 15 shares in X Co.  
  • Year 1, Week 3: Acquired 3 shares in X Co.  
  • Year 1, Week 4: Disposed of 10 shares in X Co and acquired 11 shares in X Co.  

As you can see here, there needs to be matching process undertaken to allocate the 10 shares disposed (noting the disposal triggers CGT event A1 if the asset is held on capital account) with some of the shares which were held at the time of disposal. There are a number of possible combinations one could come up with. For example, add up the 7 shares purchased in week 1, plus the 2 shares purchased in week 2, plus 1 of the 15 shares purchased in week 3. Or perhaps, one could simply match 10 of the 15 shares acquired in week 2 with the 10 shares sold.  

There is the further complication that each share may possess a different cost base. However, note that each share within a parcel of shares will carry the same cost base. By parcel, we refer to a group of shares purchased simultaneously under the same conditions. For example, the 7 shares purchased in week 1 (assuming the shares were purchased simultaneously). The reason the cost base will vary from share to share (except for shares in a parcel of shares) is because the price of shares will vary over time. The parcel purchased in week 1 may involve a purchase price of $150 per share, whereas the parcel purchased in week 3 may involve a purchase price of $250 per share.  

Therefore, the matching of shares is an important process to manage tax outcomes. The greater the cost base of the share, the less the potential capital gain (or the greater the capital loss, if any). The matching process may also provide the taxpayer with an opportunity to access the CGT discount, if the relevant buy and sell match can satisfy the 12 month holding rule.  

Whilst manually matching is generally allowable if sufficient identification between buys and sells is possible (noting this more likely if there is a lower volume of transactions occurring in respect of the particular type of CGT asset) it is often practically easier (and permitted) for a taxpayer to utilised the first in first out (FIFO) method to match and calculate capital gains and losses. Refer to Taxation Determination 33 for further information.  

In the alternative, the average cost method may be available. However, there are  potential limitations on the use of this method in certain circumstances. 

Application of anti avoidance rules

There is a risk of ATO scrutiny where a taxpayer disposes of a CGT asset and immediately reacquires the same or an identical asset in order to lock in (realise) a capital loss.  

For example, assume on 1 January 2023, John sells an investment property and makes a capital gain of $200,000. On 1 February 2023, John receives and uses the proceeds of the sale to acquire a parcel of shares for $500,000 (1,000 shares which cost $500 per share). On 30 June 2023 (the final day of the income year), the value of the parcel of shares is $300,000 (1,000 shares now valued at $300 per share). In order for John to lock in a capital loss which can be used to offset his capital gain from the disposal of the investment property, John decides to sell the 1,000 shares on 30 June 2023 and immediately reacquire the same number of identical shares. In this instance, because the sale and re-acquisition happens so quickly, the price of the shares does not change between the time he sells and the time he acquires. In this way, without bearing any economic risk (due to fluctuations in the price of shares between the time of disposal and acquisition), John completely eliminates the capital gain from the sale of his investment property.  

This type of arrangement is known as a wash sale and is likely to attract scrutiny from the ATO for a potential breach of the general anti-avoidance provisions, or the distribution washing provisions in section 207-157 of the ITAA 1997. Refer to Taxation Ruling 2008/1 and Taxation Determination 2014/10 for further information.  

The CGT discount and A1

The CGT discount will be available to discount a capital gain flowing from CGT event A1 if the eligibility criteria in Division 115 of the ITAA 1997 are satisfied.  

The small business CGT concessions and A1

The small business CGT concessions will generally be available to reduce a capital gain flowing from CGT event A1 if the eligibility criteria in Division 152 of the ITAA 1997 are satisfied. 

Competing CGT events

If CGT event A1 occurs along with another CGT event (due to the relevance of that CGT event), the basic rule is that the CGT event which is more specific to the circumstance should apply with precedence.   

It is important to correctly identify the CGT event of relevance as CGT events may be triggered at different times. This may affect the taxpayers entitlement to, for example, the CGT discount. If the CGT is triggered within 12 months of the date of acquisition of a CGT event, the general CGT discount would not be available to the taxpayer.  


If CGT event A1 occurs because an option is exercised, the capital proceeds should include any consideration received by the seller for granting of the option.  

Pre CGT assets

If a CGT asset is acquired prior to 20 September 1985, any capital gain or loss arising from CGT event A1 is to be disregarded. 


If a lessee affixes something to the lessor’s property and that affixed thing remains the property of the lessee during the term of lease and following the termination or expiry of the lease, there is no ‘disposal’ of that thing for CGT purposes. See IT 175 and Taxation Determination 46 for further information.  

However, if the lessee affixes something to the lessor’s property and the lessor becomes the owner of that thing, then CGT event A1 will occur. If the ownership passes at the end of a lease, then CGT event A1 will occur at that time. If, however, the ownership passes immediately as soon as the thing is affixed to the property, then CGT event A1 will occur at the time the thing is affixed.  

Where ownership passes, the lessee will make a capital gain or capital loss on the disposal of the thing affixed to the property. The cost base for the lessee includes the cost of purchasing and installing the fixture. Refer to Taxation Determination 47 and Taxation Determination 48 for further information. Remember that the market value substitution rule can apply in relation to the transfer to the CGT asset if there is no consideration provided by the acquiring entity for the CGT asset, or where parties are not dealing at arm’s length.  

There are broadly equivalent principles which apply in relation to capital leasehold improvements made by a lessee. Therefore, the timing of ownership passing needs to be determined as CGT event A1 will occur at this point.  The lessee will then need to recognise a capital gain or capital loss.  

The cost base for the lessee includes the cost of purchasing and installing the leasehold improvement. Again, the market value substitution rule can apply in relation to the transfer to the CGT asset if there is no consideration or where the relevant parties are not dealing at arm’s length. Refer to Taxation Determination 92/23 for further information.  

Tax Planning for CGT event A1

CGT event A1 (and the CGT regime broadly) provides taxpayers with some tax planning opportunity. These often centre around the timing of the realisation of the CGT asset. 

For example, it may be more favourable to realise assets when:  

  • The asset has been held for at least 12-months to enable access to the CGT discount.  
  • In respect of an active asset, when that asset has been held continually for a 15-year period to enable the taxpayer access to the 15-year CGT small business concession (subject to satisfying the other basic conditions).  
  • Where the taxpayer has capital losses (from the current income year or prior income years) which can be applied against the capital gain to reduce the net capital gain calculation.  
  • The capital gain is made in an income year where the taxpayer has a lower marginal rate to minimise tax imposed on the capital gain. 

The decision to hold an asset in a sole name or jointly with others will also affect tax outcomes on capital gains flowing from CGT event A1. If there is a spread of ownership over an asset, the rate of tax imposed on the capital gain may be reduced as the entire capital gain is not taxed to a single individual under the marginal rates system.

This article is general information only and does not provide advice to address your personal circumstances. To make an informed decision you should contact an appropriately qualified professional.