Asset disposed of in current year
A person’s capital gain during the current year is equal to the amount by which the proceeds received or accrued on the disposal exceed the base cost of the asset. The words ‘in respect of’ make it clear that amounts received or accrued before the disposal of an asset must be brought to account as proceeds in the year of disposal in calculating a capital gain. A receipt or accrual causally connected to a disposal will qualify as part of the proceeds from such disposal in spite of the fact that such receipt or accrual may have preceded that disposal. The determining factor is whether the proceeds were received or accrued ‘in respect of’ the disposal.
Asset disposed of in an earlier year
Sometimes an asset is disposed of in a previous year of assessment and the capital gain or loss will have been determined and taken into account in that year of assessment. However, if any of the events shown in the table below occur in a subsequent year they will give rise to a capital gain in that year.
Events giving rise to a capital gain in a year subsequent to the year of disposal
|Event giving rise to capital gain in subsequent year
|Receipt of accrual of further proceeds not previously accounted for.
|Recovery or recoupment of part of the base cost not previously accounted for
|In the case of a pre-valuation date asset Any capital gain predetermined in the current year, plus If a capital loss previously arose, the amount of that capital loss.
|When an asset is reacquired in a year subsequent to the year of assessment in which it was disposed of as a result of the cancellation of the agreement, any capital loss previously determined is treated as a capital gain in the year of cancellation.