CGT - paying in next FY

Discussion in 'The Buying & Selling Process' started by Burramys, 30th Apr, 2017.

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  1. Burramys

    Burramys Well-Known Member

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    I'm in the process of listing an IP for sale. There's been a bit of interest, and it may be possible to have a binding agreement soon. If so, my understanding is that this is taken to be a contract note for CGT purposes, and CGT will be calculated for FY17. My aim is to have the contract note or the like in FY18, thus delaying GCT for 12 months.

    I can recall discussions about this but cannot locate any threads. Advice is needed. Is it possible to have a binding agreement signed in FY17 and pay CGT for FY18?
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    Not really

    You could make the contract conditional on something that arises after 1 July so that if the condition is not met there is no contract.

    Another option is an option agreement but I am not sure about this.

    Seek legal advice
     
  3. Marg4000

    Marg4000 Well-Known Member

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    My advice would be to list in June, but don't sign a contract until after 1st July. We did this once, had the price agreed with the very keen buyer then sat on the contract for a week or so. Signed on 3rd July to avoid any issues.
    Marg
     
  4. Ross Forrester

    Ross Forrester Well-Known Member

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    I think a contract with a condition precedent is your only option - but this might confuse people

    Why not just list it in June and sell in July?
     
    Terry_w and legallyblonde like this.
  5. Burramys

    Burramys Well-Known Member

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    That would be ideal, but it's a question of timing. There needs to be 60 days lead-time for having the tenent leave, so notice will be given this week. A REA needs to be appointed about a month before the auction, Late May to early June. However, offers have been made, and if one of them is high enough I may accept. The offers are well above the short-list REA EPR.

    It comes down to accpeting a price that is much higher than the REA quoted or going to uctionand maybe getting a higher price with about $20,000 costs. Lots of unknowns.

    However, this may be simpler and certainly it's simpler. There's a significant CG so paying $20,000 is just another cost, and will reduce my tax a little. I can say with some certainty that I am undecided.
     
  6. kierank

    kierank Well-Known Member

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    Pay the tax. Our Budget needs it :) :).
     
  7. Ross Forrester

    Ross Forrester Well-Known Member

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    Yeah - that sucks

    You have the argument of a bird in the hand or 2 in the bush. You are only talking a timing advantage with the cgt so it is your call and will only ever be your call.

    I like certainty so I would sign but each person is different.
     
  8. Burramys

    Burramys Well-Known Member

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    Paying tax is contrary to my religion. Besides, Mr Hockey has matters well in hand. Or is it still Paul Keating? Kerry Packer said "Anybody in this country who does not minimise his tax wants his head read." He does not pay tax. In any case, the tax will be paid, no problem there. It will just be dalyed for a year.

    I may go down the simple path - appoint a REA, list in late June, sell in July.