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Commentary

C2.106 Deferred and contingent consideration on disposals

Capital gains tax

C2.106 Deferred and contingent consideration on disposals

The amount of the actual consideration received for the disposal of an asset by a taxpayer could be either fully or partly payable after the disposal in the form of deferred consideration. In addition, part of the consideration may be conditional on a future event happening, ie contingent consideration. The calculation of the amount of consideration will depend on whether any deferred contingent consideration is ascertainable (see below) or unascertainable — see C2.107.

What is ascertainable deferred consideration?

Deferred consideration is ascertainable if the three following conditions are all met for the future payments1:

  1. Ìý

    •ÌýÌýÌýÌý the amounts are known at the date of disposal

  2. Ìý

    •ÌýÌýÌýÌý the amounts can be calculated at the date of the disposal whether or not the calculation has taken place at that time, for example it could be based on a financial statement for a business to be calculated at the date of disposal

  3. Ìý

    •ÌýÌýÌýÌý the amounts are determined by events all of which occur before the

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