CGT Events
What is a CGT event?
When you sell an asset that is subject to capital gains tax (CGT), it is called a CGT event. This is the point at which you make a capital gain or loss. There are other CGT events, such as the loss or destruction of an asset, or creating contractual or other rights. The type of CGT event that applies to your situation may affect:
- the time when the CGT event happens
- how to calculate your capital gain or loss.
If more than one CGT event happens, you apply the rules for the one that best matches your situation. For more information about the CGT events listed below see Division 104 of the Income Tax Assessment Act 1997.
Disposal (A)
| CGT event | Time of event | Capital gain | Capital loss |
| A1 – Disposal of a CGT asset (see CGT Event A1) | When the disposal contract is entered into or, if none, when the entity stops being the asset’s owner | The capital proceeds from disposal less the asset’s cost base. | The asset’s reduced cost base less the capital proceeds. |
Hire Purchase And Similar Agreements (B)
| CGT event | Time of event | Capital gain | Capital loss |
| B1 – Use and enjoyment before title passes (see CGT Event B1) | When use of the CGT asset passes | The capital proceeds less the asset’s cost base | The asset’s reduced cost base less the capital proceeds |
End Of A CGT Asset (C) - Includes Loss Or Destruction
| CGT event | Time of event | Capital gain | Capital loss |
| C1 – Loss or destruction of a CGT asset (see CGT Event C1) | When compensation is first received or, if none, when the loss is discovered or destruction occurred | The capital proceeds less the asset’s cost base | The asset’s reduced cost base less the capital proceeds |
| C2 – Cancellation, surrender and similar endings (see CGT Event C2) | When the contract ending an asset is entered into or, if none, when an asset ends | The capital proceeds from the ending less the asset’s cost base | The asset’s reduced cost base less the capital proceeds |
| C3 – End of an option to acquire shares etc (see CGT Event C3) | When the option ends | The capital proceeds from granting the option less the expenditure in granting it | The expenditure in granting the option less the capital proceeds |
Bringing A CGT Asset Into Existence (D)
| CGT event | Time of event | Capital gain | Capital loss |
| D1 – Creating contractual or other rights (see CGT Event D1) | When the contract is entered into or the right is created | The capital proceeds from creating the right less the incidental costs of creating the right | The incidental costs of creating the right less the capital proceeds |
| D2 – Granting an option | When the option is granted | The capital proceeds from the grant less the expenditure to grant it (e.g. buy/sell agreement) | The expenditure to grant the option less the capital proceeds |
| D3 – Granting a right to income from mining | When the contract is entered into or, if none, when the right is granted | The capital proceeds from the grant of right less the expenditure to grant it | The expenditure to grant the option less the capital proceeds |
| D4 – Entering into a conservation covenant | When covenant is entered into | The capital proceeds from covenant less the cost base apportioned to the covenant | The reduced cost base apportioned to the covenant less the capital proceeds from covenant |
Trusts (E)
| CGT event | Time of event | Capital gain | Capital loss |
| E1 – Creating a trust over a CGT asset (see CGT Event E1) | When the trust is created | Capital proceeds from creating the trust less the asset’s cost base | The asset’s reduced cost base less the capital proceeds |
| E2 – Transferring a CGT asset to a trust (see CGT Event E2) | When the asset is transferred | Capital proceeds from the transfer less the asset’s cost base | The asset’s reduced cost base less the capital proceeds |
| E3 – Converting a trust to a unit trust (see CGT Event E3) | When the trust is converted | Market value of the asset at that time less its cost base | The asset’s reduced cost base less that market value |
| E4 – Capital payment for trust interest (see CGT Event E4) | When the trustee makes the payment | Non-assessable part of the payment less the cost base of the trust interest | No capital loss |
| E5 – Beneficiary becoming entitled to a trust asset | When the beneficiary becomes absolutely entitled | For a trustee: market value of the CGT asset at that time less its cost base For a beneficiary: that market value less the cost base of the beneficiary’s capital interest | For a trustee: the reduced cost base of the CGT asset at that time less that market value For a beneficiary: the reduced cost base of the beneficiary’s capital interest less that market value |
| E6 – Disposal to a beneficiary to end an income right | The time of the disposal | For a trustee: market value of the CGT asset at that time less its cost base For a beneficiary: that market value less the cost base of the beneficiary’s right to income | For a trustee: the reduced cost base of the CGT asset at that time less that market value For a beneficiary: the reduced cost base of the beneficiary’s right to income less that market value |
| E7 – Disposal to a beneficiary to end capital interest (see CGT Event E7) | The time of the disposal | For a trustee: market value of the CGT asset at that time less its cost base For a beneficiary: that market value less the cost base of the beneficiary’s capital interest | For a trustee: the reduced cost base of the CGT asset at that time less that market value For a beneficiary: the reduced cost base of the beneficiary’s capital interest less that market value |
| E8 – Disposal by a beneficiary of capital interest (see CGT Event E8) | When the disposal contract is entered into or, if none, when the beneficiary ceases to own the CGT asset | Capital proceeds less the appropriate proportion of the trust’s net assets | The appropriate proportion of the trust’s net assets less the capital proceeds |
| E9 – Creating a trust over future property (see CGT Event E9) | When the entity makes an agreement | Market value of the property (as if it existed when the agreement was made) less incidental costs in making the agreement | The incidental costs in making the agreement less the market value of the property (as if it existed when the agreement was made) |
| E10 – Annual cost base reduction exceeds cost base of interest in attribution managed investment trust | When the reduction happens | Excess of cost base reduction over cost base | No capital loss |
Leases (F)
| CGT event | Time of event | Capital gain | Capital loss |
| F1 – Granting a lease | For granting a lease: when the entity enters into the lease contract or, if none, at the start of the lease For a lease renewal or extension: at the start of the renewal or extension | Capital proceeds less the expenditure on grant, renewal or extension | Expenditure on grant, renewal or extension less the capital proceeds |
| F2 – Granting a long-term lease | For granting a lease: when the lessor grants the lease For a lease renewal or extension: at the start of the renewal or extension | Capital proceeds from the grant, renewal or extension less the cost base of the leased property | Reduced cost base of the leased property less the capital proceeds from the grant, renewal or extension |
| F3 – Lessor pays lessee to get lease changed | When the lease term is varied or waived | No capital gain | Amount of expenditure to get lessee’s agreement |
| F4 – Lessee receives payment for changing a lease (e.g. lease variation) | When the lease term is varied or waived | Capital proceeds less the cost base of lease | No capital loss |
| F5 – Lessor receives payment for changing a lease | When the lease term is varied or waived | Capital proceeds less expenditure in relation to variation or waiver | Expenditure in relation to variation or waiver less the capital proceeds |
Shares (G)
| CGT event | Time of event | Capital gain | Capital loss |
| G1 – Capital payment for shares (see CGT Event G1) | When the company pays a non-assessable amount | Payment less the cost base of shares | No capital loss |
| G3 – Liquidator or administrator declares shares or financial instruments worthless (see CGT Event G3) | When declaration was made | No capital gain | Reduced cost base of shares or financial instruments |
Special Capital Receipts (H)
| CGT event | Time of event | Capital gain | Capital loss |
| H1 – Forfeiture of a deposit | When the deposit is forfeited | Deposit less expenditure in connection with the prospective sale | Expenditure in connection with the prospective sale less deposit |
| H2 – Receipt for an event relating to a CGT asset (see CGT Event H2) | When the act, transaction or event occurred | Capital proceeds less the incidental costs | Incidental costs less the capital proceeds |
Cessation Of Residency (I)
| CGT event | Time of event | Capital gain | Capital loss |
| I1 – Individual or company stops being an Australian resident (see CGT Event I1) | When the individual or company stops being an Australian resident | For each CGT asset the individual or company owns, its market value less its cost base | For each CGT asset the individual or company owns, its reduced cost base less its market value |
| I2 – Trust stops being a resident trust | When the trust ceases to be a resident trust for CGT purposes | For each CGT asset the trustee owns, its market value less its cost base | For each CGT asset the trustee owns, its reduced cost base less its market value |
Rollovers (J)
| CGT event | Time of event | Capital gain | Capital loss |
| J1 – Company stops being a member of a wholly owned group after a rollover | When the company stops being a member of a wholly owned group after a rollover | Market value of the asset at the time of the event less its cost base | Reduced cost base of the asset less that market value |
| J2 – Change in relation to a replacement asset or improved asset after a rollover under Subdivision 152-E (see CGT Event J2) | When the change happens | The amount mentioned in subsection 104-185(5) | No capital loss |
| J4 – Trust failing to cease to exist after rollover under Subdivision 124-N | When the failure to cease to exist happens | For a company: market value of the asset at the time the company acquired it less its cost base at that time For a shareholder: market value of the share at the time the shareholder acquired it less its cost base at that time | For a company: reduced cost base of the asset at the time the company acquired it less its market value at that time For a shareholder: reduced cost base of the share at the time the shareholder acquired it less its market value at that time |
| J5 – Failure to acquire a replacement asset and to incur fourth element expenditure after a rollover under Subdivision 152E (see CGT Event J5) | At the end of the replacement asset period | The amount of the capital gain that you disregarded under Subdivision 152E | No capital loss |
| J6 – Cost of acquisition of replacement asset or amount of fourth element expenditure, or both, not sufficient to cover disregarded capital gain (see CGT Event J6) | At the end of the replacement asset period | The amount mentioned in subsection 104-198(3) | No capital loss |
Other CGT Events (K)
| CGT event | Time of event | Capital gain | Capital loss |
| K1 – As the result of an incoming international transfer of a Kyoto unit or an Australian carbon credit unit from your foreign account or your nominee’s foreign account, you start to hold the unit as a registered emissions unit | When you start to hold the unit as a registered emissions unit | Market value of unit less its cost base | Reduced cost base of the unit less its market value |
| K2 – Bankrupt pays an amount in relation to debt (see CGT Event K2) | When payment is made | No capital gain | That part of the payment that relates to the denied part of a net capital loss |
| K3 – Asset passing to a tax-advantaged entity (see CGT Event K3) | When an individual dies | Market value of the asset at death less its cost base | Reduced cost base of the asset less that market value |
| K4 – CGT asset starts being trading stock (see CGT Event K4) | When the asset starts being trading stock | Market value of asset less its cost base | Reduced cost base of the asset less that market value |
| K5 – Special capital loss from a collectable that has fallen in market value (see CGT Event K5) | When CGT event A1, C2 or E8 happens to shares in the company, or an interest in the trust, that owns the collectable | No capital gain | Market value of the shares or interest (as if the collectable had not fallen in market value) less the capital proceeds from CGT event A1, C2 or E8 |
| K6 – Pre-CGT shares or trust interest (see CGT Event K6) | When another CGT event involving the shares or interest happens | Capital proceeds from the shares or trust interest that are attributable to post-CGT assets owned by the company or trust, less the assets’ cost bases | No capital loss |
| K7 – Balancing adjustment occurs for a depreciating asset that you used for purposes other than taxable purposes (see CGT Event K7) | When the balancing adjustment event occurs | Termination value less cost times fraction | Cost less termination value times fraction |
| K8 – Direct value shifts affecting your equity or loan interests in a company or trust | The decrease time for the interests | Capital gain worked out under section 725-365 | No capital loss |
| K9 – Entitlement to receive payment of a carried interest | When you become entitled to receive the payment | Capital proceeds from the entitlement | No capital loss |
| K10 – You make a forex realisation gain as a result of forex realisation event 2 and item 1 of the table in subsection 775-70(1) applies | When the forex realisation event happens | Equal to the forex realisation gain | No capital loss |
| K11 – You make a forex realisation loss as a result of forex realisation event 2 and item 1 of the table in subsection 775-75(1) applies | When the forex realisation event happens | No capital gain | Equal to the forex realisation loss |
| K12 – Foreign hybrid loss exposure adjustment | Just before the end of the income year | No capital gain | Equal to the forex realisation loss |
Consolidations (L)
| CGT event | Time of event | Capital gain | Capital loss |
| L1 – Reduction under section 705-57 in tax cost setting amount of assets of entity becoming subsidiary member of consolidated group or multiple entry consolidated group | Just after entity becomes subsidiary member | No capital gain | Amount of reduction |
| L2 – Amount remaining after step 3A (of the table in section 705-60) of joining ‘allocable cost amount’ is negative | Just after entity becomes subsidiary member | Amount remaining | No capital loss |
| L3 – Tax cost setting amounts for retained cost base assets exceed joining ‘allocable cost amount’ | Just after entity becomes subsidiary member | Amount of excess | No capital loss |
| L4 – No reset cost base assets against which to apply excess of net ‘allocable cost amount’ on joining | Just after entity becomes subsidiary member | No capital gain | Amount of excess |
| L5 – Amount remaining after step 4 (of the table in section 711-20) of leaving ‘allocable cost amount’ is negative | When entity ceases to be subsidiary member | Amount remaining | No capital loss |
| L6 – Error in calculation of tax cost setting amount for joining entity’s assets | Start of the income year when the Commissioner becomes aware of the errors | The net overstated amount resulting from the errors, or a portion of that amount | The net understated amount resulting from the errors, or a portion of that amount |
| L8 – Reduction in tax cost setting amount for reset cost base assets on joining cannot be allocated | Just after entity becomes a subsidiary member | No capital gain | Amount of reduction that cannot be allocated |
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.
