CGT Event I1 When an Individual Ceases Australian Tax Residency

When an individual ceases Australian tax residency, CGT event I1 can apply to CGT assets that are not taxable Australian property. The individual is generally taken to dispose of each affected asset for its market value at the cessation time.

The event can create an assessable capital gain without sale proceeds. That makes the residency date, asset inventory and valuation evidence critical.

Which assets are affected

Potentially affected assets include shares, managed fund interests, units, cryptocurrency, foreign real property and other CGT assets that fall outside taxable Australian property. Separate exemptions and special rules can apply.

Taxable Australian property is generally excluded because Australia retains taxing rights over it after departure. Australian real property is the clearest example, but not every Australian share or investment is taxable Australian property.

Market value and cost base

The deemed proceeds are generally market value at the cessation time. The cost base, ownership and available capital losses then determine the gain or loss. Listed investments can often be valued from reliable market data; private companies, foreign property and illiquid assets may require specialist valuation.

Retain the valuation date, methodology, exchange rates and evidence. Small date differences can be material in volatile markets.

Exemptions and special assets

Pre-CGT assets, personal-use assets, collectables, employee share scheme interests and interests covered by other regimes require specific review. Some gains may qualify for the CGT discount, but foreign-resident discount restrictions and residence periods can affect the calculation.

Temporary-resident concessions can also alter the departure treatment.

No automatic cash funding

Because the event is deemed, the taxpayer may owe tax while continuing to hold the asset. Planning may require estimating the liability and considering whether to make the statutory choice to disregard the event.

Funding decisions can involve financial advice and should not be presented as tax compliance alone.

Practical takeaway

At departure, prepare a complete asset register, classify taxable Australian property, obtain market values and compare the immediate I1 outcome with the consequences of making the disregard choice.

Official sources and further reading

• Australian Taxation Office: How changing residency affects CGT
• Australian Taxation Office: Taxable Australian property
• Australian Taxation Office: CGT discount for foreign residents
• Australian Taxation Office: Foreign and temporary resident income

CGT