By Jim Main -
Snapshot
- The end of the financial year always raises issues.
- CGT issues are technical and difficult.
- Always talk to the accountant.
You’ve had a helluva year. Your senior partner finally pulled the plug at age 77. A junior lawyer got fed up with the workload and left. You’ve managed to employ a good young lawyer but she doesn’t have much experience. The year has been very busy and, as the end of financial year is approaching, things could get worse.
First problem
Your client Frank has found a buyer for his commercial property at a good price. But he doesn’t want to pay CGT too quickly, so asks you to postpone the sale until after 30 June. He is worried about losing the sale, so you say:
“Let’s exchange contracts now but delay settlement until after 30 June – that should fix the problem.”
“Good thinking,” says Frank.
First potential sting – go slower!
Frank’s sale will trigger CGT event A1, the time of which is the date of the contract not the transfer (ITAA 1997, s 104-10(3)(a). If you exchange on or before 30 June, the capital gain will be included in Frank’s tax bill for this year – a year earlier than if you exchanged on 1 July.
