Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 116 - Capital proceeds  

Modifications to general rules  

SECTION 116-50   Repaid rule: modification 4  

116-50(1)    

The *capital proceeds from a *CGT event are reduced by:

(a) any part of them that you repay; or

(b) any compensation you pay that can reasonably be regarded as a repayment of part of them.

However, the capital proceeds are not reduced by any part of the payment that you can deduct.

Example:

You sell a block of land for $50,000 (the capital proceeds). The purchaser later finds out that you misrepresented a term in the contract. The purchaser sues you and the court orders you to pay $10,000 in damages to the purchaser.

The capital proceeds are reduced by $10,000.

116-50(2)    
The payment can include giving property: see section 103-5 .