On what date does the seller become liable for CGT on the sale of fixed property.
This question is only relevant when the liability date could fall either into the previous tax year or the new tax year of the seller.
Let’s say that the seller’s tax year ends on 28 February.
The Offer to Purchase was signed by both parties on 15 January 2023.
The supensive clauses were satisfied on 5 February 2023.
The transfer was registered at the Deeds Office on 25 March 2023.
From a CGT point of view, when were the proceeds of the sale received by or accrued to the seller? (see 3(a) Eighth Schedule, Income Tax Act)
My view, as a Chartered Accountant, is that the relevant date is the date upon which the risks and rewards of ownership pass from the seller to the buyer. This is consistent with International Accounting Practice.
Now you would have to go to the Offer to Purchase to find that date. Usually, it is when the transfer is registered at the Deeds Office (25 March 2023 in the above example and therefore falling into tax year ended 28 February 2024).