Capital Gains Tax (CGT) events occur when an individual or company makes a capital gain or capital loss by selling or disposing of an asset they own. The timing of a CGT event is quite important, as it determines which income year an individual will report the capital gain or capital loss, and may affect how their tax liability is calculated.
CGT events can happen when:
- Selling or giving away an asset.
- The destruction or loss (voluntary or involuntary) of a CGT asset.
- Receiving compensation for the loss, destruction or compulsory acquisition of a CGT asset.
- The disposal of a depreciating asset used for non-taxable (private) purposes.
- Capital distributions to company shareholders or unitholders in a unit trust or managed fund.
- Shares or units being cancelled, surrendered, redeemed or declared worthless.
- You stop being an Australian tax resident.
- You enter into an agreement not to work in a particular industry for a set period of time
- A trustee makes a non-assessable payment to you from a managed fund or other unit trusts.
- A company makes a payment (not a dividend) to you as a shareholder.
When a CGT asset is disposed of, the CGT event usually takes place when a contract for disposal is entered into or when an individual is no longer the owner of the asset. Cases where a CGT asset is lost or destroyed, the CGT event will happen when the owner of the asset receives compensation for the loss/destruction or when the loss is discovered/when the destruction happened.