Hoping some one can help me.
This is the scenario l signed a contrcat of sale to purchase a property on the 20th April 2005, with settlement transacted on the 20th June 2005
I am about to sell that property.
To mimimize GCT should hold off signing the a contract of sale to sell until after the 20th April 2006 … even if settlement may be before the 20th June 2006 ? Or should l aim to have settlement occur after the 20th June 2006 , regardless of when the contract of sale is signed ( ie before 20th April 2006)
I am aware of the 12 month ruling, but not sure of the key transactions dates that it kicks in.to effect.
The date on the contract is the date that is effective for capital gains tax. So the first contract was signed on the 20th April 2005, so as long as the next contract was signed and dated after the 20th April 2006 then you have met the 12 month criteria.
When properties settle is actually irrelevant.
Regards
PKThanks for the clarification.
I may be wrong, but I think its the settlement date that counts, Be careful with this.
Gavin,
You are wrong. Under Section 104.10 of the ITAA 1997 CGT event A1 happens if you dispose of a CGT asset. Section 104.10 is included below with relevant sections and examples in bold. Note this is taken directly from the Act.
You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur:
(a) if you stop being the legal owner of the asset but continue to be its beneficial owner; or
(b) merely because of a change of trustee.
The time of the event is:
(a) when you enter into the contract for the disposal; or
(b) if there is no contract—when the change of ownership occurs.Example: In June 1999 you enter into a contract to sell land. The contract is settled in October 1999. You make a capital gain of $50,000.
The gain is made in the 1998-99 income year (the year you entered into the contract) and not the 1999-2000 income year (the year that settlement takes place).
Note 1: If the contract falls through before completion, this event does not happen because no change in ownership occurs.
Note 2: If the asset was compulsorily acquired from you: see subsection (6).
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