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Tony owned a rental property that was destroyed by bush fire in December 2018. He received...

Tony owned a rental property that was destroyed by bush fire in December 2018. He received a payment under an insurance policy in July 2019. What CGT event has happened due to the above scenario and in which income year the CGT event has occurred?

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Answer #1

What CGT event has happened due to the above scenario and in which income year the CGT event has occurred?

Capital Gain event (CGT) has happened when Tony received insurance payout for his destroyed rental property. Rental property was a revenue generating asset and thus destruction and insurance payout for the same will trigger capital gain tax. The CGT event has occured in the year in which Tony actually first received the payment under an insurance policy. That is in this question year 2019. Had there been no insurance payout, CGT event would have happened in 2018, that is when rental property was destroyed.

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