Hi
if you sign contract to sell PI in June
settle in July
Is capital gain in June year or July?
Does anyone know?
PI in WA, I am in NSW
Glenn“I should be content to look at a mountain for what it is and not as a comment on my life” D. Ignatow
Hi recoveryman,
Capital Gains will be effective from contract date of sale (June), not settlement date (July).
Sorry, forgot to add, even if it is on the June 30th it will be calculated into that fiscal year just gone.Cheers,
Jo
I agree. ATO classes a sale to occur when the contract goes unconditional, ie on exchange.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thank you
so the date the contract goes unconditional
not the date that I first signed the contract
Glenn“I should be content to look at a mountain for what it is and not as a comment on my life” D. Ignatow
So in Qld it will be the contract date – date when vendor and purchaser sign/countersign agreed terms and conditions -as we don’t have ‘exchange’ and freely enter into contracts which are ‘subject to’.
cheers
brahms
If you don’t ask, the answer is no!!
Brahms is bang on for Qld Contract date is the date taken when calulating CGT and not the unconditional or settlement date.
The other thing is when seeking a 50% reduction in CGT because you have held the property for 1 year it is actually 1 year and 1 day that you need to hold the property and that is calculated between the 2 purchase dates.
Have seen several clients come unstuck by miscalulating their dates.
Cheers Richard
richard at fhog.com.au
http://www.fhog.com.auThere is no such thing as a problem.
Just a solution waiting to be foundRichard Taylor | Australia's leading private lender
I am still a little confused. What is the sale date in this case?
Contract date subject to finance and building report 12 June 2004.
Contract now unconditional 2 July 2004.
Settlement Date 15 August 2004?
What is the date for CGT purposes?
I am not actually sure, but after reading Richard’s comments, think it would be the original contract date, 12 June 2004 in your example.
You should be able to find something on the ATO site to confirm, or give them a call.
Terryw
Discover Home Loans
North Sydney
[email protected]Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
I will check with ATO.
I believe its settlement date. You still have all the rights and responsibilities of ownership till settlement.
Once I know I will post reply.
From a Master Tax Guide – 1989. the data may be wrong – but i doubt it.
“In the absense of a specific provision governing the time of acquisition or disposal of as asset, the following rules apply;
1. If an asset was acquired or disposed of under a contract, the time of acquisition or dispoal is the time of making the contract
2. etc
3. etc”So my reading of the above is that a normal sale contract would state the date of acquisition/dispoal. And that date stated is the settlement date.
Trying to administer contract date would be a nightmare for the everyone when settlement date is much clearer.
If anyone disagrees let me know, but its clear to me.
1. If an asset was acquired or disposed of under a contract, the time of acquisition or dispoal is the time of making the contractYack, I wouls say that time of making the contract is the actual contract date. It’s also what my accountant told me a couple of years ago, hence I did not exchange contracts until 6 July rather than last week of June. Upset my buyers as of course the govt had increased stamp duty, so I dropped the price by $1K to cover it, but didn’t have to pay CGT until that FY.
It’s a rather important distinction for onselling OTP purchase (which ours was), so I didn’t really want to pay the CGT months to years before I ever saw a cent of the money. Not sure how it works if the development never ends up happening, or your buyer defaults, could get ugly I suppose[fart]
Cheers
MelOriginally posted by yack:“In the absense of a specific provision governing the time of acquisition or disposal of as asset, the following rules apply;
1. If an asset was acquired or disposed of under a contract, the time of acquisition or dispoal is the time of making the contract
2. etc
3. etc”So I reckon the contract would state the settlement date or date the remaining funds are due – therefore the contract to me states the date when transfer takes place.
Yes, the contract states the date it is ‘supposed to’ take place – sometimes it says 42 days from date of contract. For varying reasons though, this might not happen on that date.
The only set in contract date in the contract, is the date it was signed. Perhaps that is why it is the one used?
Cheers
Mel
You must be logged in to reply to this topic. If you don't have an account, you can register here.
