Entering a contract
- Thread starter de nero
- Start date
The contract is enforceable only when both parties sign the contract, subject to agreed upon conditions in the contract. That's why just having the buyer sign the contract ISN'T a valid contract (until the seller also signs) as many people have found when they get gazumped (happened to me once).
Alex
Alex
Bobby D...
in my old law study days contracts were many things....fascinating topic i reckon. had to have something to exchange, offer, acceptance, intention to be legal, cant be illegal, you must be in position to or be the relevant person....they could even be implied!! you are under contract to purchase a bus ticket when you get on a bus....!!!
commercial contracts do however have certain conditions and pretty sure in your case, would be when you both sign whatever it is you sign. there is generally a commercial contract document of some sorts, and generally when both parties sign it...thats your time.
in my old law study days contracts were many things....fascinating topic i reckon. had to have something to exchange, offer, acceptance, intention to be legal, cant be illegal, you must be in position to or be the relevant person....they could even be implied!! you are under contract to purchase a bus ticket when you get on a bus....!!!
commercial contracts do however have certain conditions and pretty sure in your case, would be when you both sign whatever it is you sign. there is generally a commercial contract document of some sorts, and generally when both parties sign it...thats your time.
Hi de nero
As your question relates to the sale of a capital asset, the ATO takes the view that the period of time of ownership runs from date of contract to buy through to date of contract to sell.
In this instance you are the vendor.
The date on which the purchaser makes their first offer to buy from you is the date of the contract. They have stated their intention to buy and although negotiations may stretch on for days or even weeks, the date they have offered to buy is the date of the contract.
The date that you accept the offer and the date of exchange of the contracts are secondary to the initial date.
Not all contracts must be in writing, but under the various Instruments Acts contracts for the sale of property must be in writing.
Many a vendor has been 'caught out' by putting their property on the market within the first twelve months of ownership, thinking that they will be eligible to discount the capital gains by the 50% rule after a year and a day, with the relevant date being that of settlement. However, due to the date of the contract of sale being the date on which capital gains is assessed can mean missing the discount, but more importantly incurring a capital gain and therefore tax on the gain in the current tax year. Oops!
Check the ATO website, there are lots of practical examples of how this all works. It is their rules, after all, so may as well play the game in the standard format.
Hope this helps
Kristine
As your question relates to the sale of a capital asset, the ATO takes the view that the period of time of ownership runs from date of contract to buy through to date of contract to sell.
In this instance you are the vendor.
The date on which the purchaser makes their first offer to buy from you is the date of the contract. They have stated their intention to buy and although negotiations may stretch on for days or even weeks, the date they have offered to buy is the date of the contract.
The date that you accept the offer and the date of exchange of the contracts are secondary to the initial date.
Not all contracts must be in writing, but under the various Instruments Acts contracts for the sale of property must be in writing.
Many a vendor has been 'caught out' by putting their property on the market within the first twelve months of ownership, thinking that they will be eligible to discount the capital gains by the 50% rule after a year and a day, with the relevant date being that of settlement. However, due to the date of the contract of sale being the date on which capital gains is assessed can mean missing the discount, but more importantly incurring a capital gain and therefore tax on the gain in the current tax year. Oops!
Check the ATO website, there are lots of practical examples of how this all works. It is their rules, after all, so may as well play the game in the standard format.
Hope this helps
Kristine
Kristine provides an excellent answer. Can I go on to mention also that if you wish to put your asset onto the market now and if you should obtain a good buyer for the asset you are selling, your solicitor may also be able to formulate the sale by way of a put and call option. This way will allow you to enter into an arrangement without the liability date commencing until later on, on a specified date/period.
The legal costs involved would be higher though, but it will be worth it if its a good deal.
The legal costs involved would be higher though, but it will be worth it if its a good deal.
G'Day
This might be of relevance
http://www.ato.gov.au/individuals/content.asp?doc=/content/36899.htm
and also just follow various links so that you build up a clear picture.
As the page says,
When does a CGT event occur?
The most common CGT event that happens to real estate is its sale or disposal – CGT event A1. The time of the event is:
when you enter into the contract for the disposal (my emphasis)
As with most things in life, 'time is of the essense' - when events happen affects how the events are subsequently dealt with.
Cheers
Kristine
This might be of relevance
http://www.ato.gov.au/individuals/content.asp?doc=/content/36899.htm
and also just follow various links so that you build up a clear picture.
As the page says,
When does a CGT event occur?
The most common CGT event that happens to real estate is its sale or disposal – CGT event A1. The time of the event is:
when you enter into the contract for the disposal (my emphasis)
As with most things in life, 'time is of the essense' - when events happen affects how the events are subsequently dealt with.
Cheers
Kristine
