CGT Contract Date vs Settlement: Which Year Counts? 2026-27

The contract date decides. If you sign the sale contract for your investment property on 25 June 2027 and settlement happens on 24 August 2027, your capital gain belongs in your 2026–27 tax return — not 2027–28. The settlement date has no bearing on which financial year your capital gain or loss falls in.

This confuses almost every first-time seller, and for good reason: the money arrives at settlement. But the ATO treats the sale as happening when you commit, not when you get paid. Get this wrong and you can report a six-figure gain in the wrong year’s return, fail the 12-month discount test, or miss a once-in-a-generation reform boundary that hinges entirely on which side of 1 July 2027 your contract falls. Here’s how the rule works, in real 2026–27 dollars.

How CGT timing actually works (CGT event A1)

Capital gains tax doesn’t apply when cash changes hands — it applies when a CGT event happens. For most property and share sales, that’s CGT event A1: the disposal of a CGT asset. The ATO states the timing plainly: the event happens “when the disposal contract is entered into or, if none, when the entity stops being the asset’s owner.”

In practice, that means:

• Property: the date the contract of sale is signed (exchange), not settlement day.
• Shares: the trade date on your contract note — not the T+2 settlement date.
• Crypto: the date the trade executes on the exchange, not when you withdraw to your bank.

What about conditional contracts? If your sale is subject to finance approval or a building-and-pest inspection, the CGT event is still the contract date — the conditions don’t move it, according to ATO guidance. And when there is no contract at all (a gift, an inheritance transfer, some forced disposals), the event happens when ownership actually changes hands.

Contract date vs settlement date: what each one decides

What needs deciding	Contract date	Settlement date
Which financial year the gain or loss is reported in	✓ Decides it	— Irrelevant
The end date for the 12-month discount test	✓ Decides it	— Irrelevant
Which year’s tax rates apply to the gain	✓ Decides it	— Irrelevant
Which CGT regime applies (pre- vs post-1 July 2027 reform)	✓ Decides it	— Irrelevant
When you actually receive the money	—	✓ Decides it
Foreign resident capital gains withholding (FRCGW) timing	—	✓ Withheld and remitted here
Agent commission and sale costs are deductible in CGT terms	Added to the cost base regardless of when they’re paid

Worked example: signed in June, settled in August (2026–27 dollars)

Let’s make this concrete. Sarah bought an investment unit in Newcastle:

• Purchase contract: 14 March 2024 — $520,000
• Stamp duty: $18,940 · Conveyancing on purchase: $2,500
• Starting cost base: $520,000 + $18,940 + $2,500 = $541,440

Three years later she sells:

• Sale contract signed: 25 June 2027 — $640,000
• Settlement: 24 August 2027 (the money arrives two months later)
• Agent commission (2%): $12,800 · Sale legal fees: $1,800

Now the CGT calculation, step by step:

1. Final cost base: $541,440 + $12,800 + $1,800 = $556,040. (Sale costs are added to the cost base — you don’t subtract them from the price separately.)
2. Gross capital gain: $640,000 − $556,040 = $83,960.
3. 50% CGT discount: she bought 14 March 2024 and the sale contract is 25 June 2027 — well over 12 months — so the discount applies. Assessable gain: $83,960 × 50% = $41,980.
4. Which year? The contract was signed 25 June 2027, so the whole $41,980 goes into her 2026–27 tax return — even though she doesn’t see the cash until August 2027.

What does it cost her in tax? Sarah’s other taxable income for 2026–27 is $92,000. Under the 2026–27 resident tax rates:

• Tax on $92,000 without the gain: $4,020 + 30% × $47,000 = $18,120
• Tax on $133,980 with the gain: $4,020 + 30% × $88,980 = $30,714
• Extra income tax from the sale: $12,594
• Medicare levy on the net gain: 2% × $41,980 = $839.60

Total extra tax: about $13,434 — roughly 32% of the discounted gain. That’s the cash-flow trap: settlement money lands in August 2027, but the tax isn’t payable until her 2026–27 return is lodged and assessed (by 31 October 2027, or later if she uses a tax agent). The classic advice holds: park roughly 30% of the profit where you won’t spend it.

Want to check your own sale? Run your numbers in our free CGT calculator — it uses current 2026–27 rates.

The 12-month discount clock runs contract to contract

The 50% CGT discount needs you to have owned the asset for at least 12 months before the CGT event — and the CGT event is the sale contract date. Both ends of the 12 months are contract dates, not settlement dates. For the full rules, see our guide to the 50% CGT discount and the 12-month rule.

This is where a few days can be worth five figures. Imagine Sarah’s twin brother buys an identical unit with a purchase contract dated 20 June 2025 and signs a sale contract on 10 June 2026 — 11 months and 21 days later. No discount: the entire gain is assessable. If he’d waited just ten more days and signed on or after 20 June 2026, the 50% discount would have applied, halving the taxable gain.

Don’t try to land exactly on day 365. Public holidays, weekends and state-based exchange conventions can shift which date the contract is legally “entered into” — give yourself a buffer of a few weeks if you can.

When there’s no contract: fall-throughs, deposits and options

The contract falls through — is there a CGT event?

If the buyer defaults and the sale never settles, there is no disposal, so CGT event A1 never happens. You don’t report a gain on a sale that didn’t occur. But the deposit is a different story.

A forfeited deposit is its own CGT event — CGT event H1 (forfeiture of a deposit, section 104-150 of the tax law) — in the year the deposit is forfeited. The agent’s and legal fees tied to the failed sale form the cost base of that event. Then there’s a twist from Taxation Ruling TR 1999/19: if the forfeiture happens as part of a “continuum of events” leading to a later successful sale of the same property, the deposit is folded into the capital proceeds of that later sale instead.

Bottom line: a collapsed sale doesn’t mean collapsed tax. The deposit you kept is assessable in some form — either as its own H1 event or as part of the eventual sale.

Deposit paid, but no contract signed yet

An expression of interest, an auction-day handshake, or contracts that haven’t been exchanged yet: none of these is a CGT event. There’s no disposal contract, so nothing has happened for tax purposes. Be careful with options and call-and-put arrangements, though — granting an option is a different CGT event (D2 for the grantor) that happens on grant, not on exercise.

Off-the-plan and long delayed settlements

Sign an off-the-plan contract in 2026 with settlement in 2029 and the gain still belongs to the 2026 contract year — even if you won’t see a dollar for three years. (There is administrative relief in Taxation Determination TD 94/89: you generally amend the contract year’s return after settlement rather than lodging early — but the income year itself doesn’t move.) And if you on-sell the off-the-plan contract before settlement, that resale is a fresh CGT event A1 at the date of the new contract.

The 1 July 2027 reform boundary hinges on your contract date

This is the highest-stakes timing question in Australian tax right now. Under the CGT reform announced in the 2026–27 Budget (now law under the Treasury Laws Amendment (Tax Reform No. 1) Act 2026):

• From 1 July 2027, the 50% CGT discount for resident individuals, trusts and partnerships is replaced with cost base indexation on gains that accrue on or after that date.
• A 30% minimum tax will apply to certain net capital gains accruing on or after 1 July 2027.
• Gains that arose before 1 July 2027 keep the 50% discount, with transitional rules splitting pre- and post-1 July 2027 growth for assets held across the boundary.
• The 2027–28 tax return is the first return the changes can affect.

Because a capital gain arises when the CGT event happens — the contract date — the boundary hinges on when you sign. Go back to Sarah: her sale contract is dated 25 June 2027, so the gain arises in 2026–27 and the 50% discount applies. If she’d signed the identical contract on 1 July 2027, the gain would arise under the new regime — indexation plus the 30% minimum tax, with transitional splitting for the growth that accrued before 1 July 2027.

That’s one week turning a settled rule into a brand-new calculation. The ATO is still finalising detailed guidance, so treat this as a flag to get professional advice before timing a sale around the boundary — and read our full CGT reform 1 July 2027 guide with worked scenarios.

Foreign resident withholding: a settlement-day event, not a contract-day one

Here’s where the two dates split apart. Since 1 January 2025, foreign resident capital gains withholding (FRCGW) is 15% of the sale price with no threshold. The buyer withholds it at settlement and remits it to the ATO — it’s a credit against the vendor’s final tax bill, not a final tax.

So on a cross-financial-year sale, you can have the gain taxed in the contract year’s return while the 15% withholding physically leaves at settlement in the next financial year. On Sarah’s $640,000 sale that would be $96,000 held back at the August settlement — claimed back as a credit when she lodges the 2026–27 return the gain belongs to.

If you’re an Australian resident seller, avoid this entirely: give the buyer a valid ATO clearance certificate before settlement. Full mechanics are in our foreign resident CGT and withholding guide.

Which return, and where in myTax

The gain goes in the tax return for the financial year in which the contract was signed — never the settlement year. In myTax, go to Personalise return → Capital gains, then complete the Capital gains tax schedule. In the supplementary section (item 18), you report:

• Label A — your net capital gain (the discounted, post-loss figure added to your taxable income)
• Label H — your total current-year capital gains before discounts and losses

For Sarah: label H shows $83,960 and label A shows $41,980, both in her 2026–27 return. (If you have a capital loss carried forward, apply it to the gain before the discount — never after.)

Common mistakes

1. Reporting in the settlement year. The most common error. Contract June, settled August — the gain belongs to the June financial year.
2. Measuring the 12 months from settlement. Both ends of the discount test are contract dates. Settlement-to-settlement can wrongly pass or fail the test.
3. Treating a fall-through as a non-event. No sale, no A1 — but the forfeited deposit is CGT event H1 in its own right.
4. Using the wrong year’s tax rates. The gain is taxed at the contract year’s rates. For 2026–27 that’s 15/30/37/45 cents in the dollar plus 2% Medicare levy — the second bracket dropped from 16% to 15% on 1 July 2026, so 2025–26 calculators give wrong answers.
5. Assuming you can defer reporting until you “have the cash.” The income year is fixed by the contract; delayed-settlement relief is an administrative path (amend after settlement), not a different year.
6. Spending the proceeds before the bill arrives. The tax is assessed months after settlement. Set aside roughly 30% of the profit.

Frequently asked questions

I signed in June and settled in August — which year’s tax return?

The contract year’s. A contract signed 25 June 2027 goes in your 2026–27 return, lodged in 2027, even though settlement and payment happened in August 2027. This is exactly the ATO’s own example: contracts exchanged 4 June 2026, settled 6 July 2026 → the gain belongs in the 2025–26 return.

The contract fell through after 30 June — do I still report a gain?

No gain on the sale itself, because no disposal occurred — there’s no CGT event A1. But if you kept the buyer’s deposit, that’s a separate CGT event H1 in the year it was forfeited. Check with your accountant whether it counts as its own event or folds into a later sale of the same property.

I paid a deposit but there’s no signed contract. Any CGT event?

Not yet. Until a disposal contract is entered into, nothing has happened for CGT purposes. (An option you granted is different — granting it can be CGT event D2 on the grant date.)

Does the contract date decide the 12-month discount?

Yes — both the acquisition date and the sale date used in the 12-month test are contract dates. Settlement dates are irrelevant. If your purchase contract is dated 20 June 2025, sign the sale contract on or after 20 June 2026 (with a buffer) to qualify for the 50% discount.

Which year’s tax rates apply — contract year or settlement year?

The contract year’s. The net capital gain is added to your assessable income for the year the contract was signed, so that year’s brackets and rates apply. For sales contracted in 2026–27, use the 2026–27 rates (15/30/37/45% + 2% Medicare) — our CGT calculator already does this.

The buyer withheld 15% FRCGW at a July settlement, but my contract was signed in June. How does that work?

Two different clocks. The gain is reported in the June financial year’s return; the 15% withheld at the July settlement is claimed as a credit in that same return. If the withholding exceeds your actual tax on the gain, the difference comes back as a refund.

The date that matters is the one on the contract

Strip away the jargon and the rule is one sentence: your capital gain belongs to the financial year you sign the sale contract — not the year you get paid. That date sets your return year, your tax rates, your 12-month discount test, and — from 1 July 2027 — which CGT regime your gain falls under. Check the contract date before you check anything else, and if a sale is hovering near 30 June or the 2027 reform boundary, model both scenarios before you sign. Our complete CGT on property guide walks through the full calculation when you’re ready.