When do you have to pay Capital Gains Tax?
Did you know that as a taxpayer you may be subject to CGT if you have an asset which is compulsorily acquired by a government agency?
Your first thoughts might be "I didn't want to sell the asset, so why should I have to pay any capital gains tax?"
The answer to that is simply that CGT may apply whenever an asset is deemed to have been disposed - the reason is immaterial.
CGT may be imposed not only where the taxpayer deliberately disposes of something, but where an asset has been compulsorily acquired or where the asset has been destroyed.
In limited circumstances, the taxpayer may be able to receive an amount in compensation for a compulsory acquisition without that amount being subject to CGT. Consult your solicitor if you would like further information on this matter.
Reproduced from In Touch With The Law, published by the Law Society of NSW
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