Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-1 - CAPITAL GAINS AND LOSSES: GENERAL TOPICS  

Division 104 - CGT events  

Subdivision 104-G - Shares  

SECTION 104-135   Capital payment for shares: CGT event G1  

104-135(1)    
CGT event G1 happens if:

(a) a company makes a payment to you in respect of a *share you own in the company (except for *CGT event A1 or C2 happening in relation to the share); and

(b) some or all of the payment (the non-assessable part ) is not a *dividend, or an amount that is taken to be a dividend under section 47 of the Income Tax Assessment Act 1936 ; and

(c) the payment is not included in your assessable income.

The payment can include giving property: see section 103-5 .

104-135(1A)    

In working out the non-assessable part, disregard any part of the payment that is:

(aa) *non-assessable non-exempt income; or

(a) repaid by you; or

(b) compensation you paid that can reasonably be regarded as a repayment of all or part of the payment; or

(c) an amount referred to in section 152-125 (which exempts a payment of a small business 15-year exemption amount) as an exempt amount.

The payment can include giving property: see section 103-5 .

104-135(1B)    

However, the non-assessable part is not reduced by any part of the payment that you can deduct.

104-135(2)    
The time of the event is when the company makes the payment.

104-135(3)    
You make a capital gain if the amount of the non-assessable part is more than the *share ' s *cost base. If you make a *capital gain, the share ' s *cost base and *reduced cost base are reduced to nil.

Note 1:

You cannot make a capital loss.

Note 2:

A capital gain under former section 160ZL of the Income Tax Assessment Act 1936 is also taken into account for the purposes of this subsection: see section 104-135 of the Income Tax (Transitional Provisions) Act 1997 .

104-135(4)    
However, if the amount of the non-assessable part is not more than the *share ' s *cost base, that cost base and its *reduced cost base are reduced by the amount of the non-assessable part.

Note:

Cost base adjustments are made only under Subdivision 125-B if there is a roll-over under that Subdivision for CGT event G1 happening as a result of a demerger.

Exceptions

104-135(5)    
A *capital gain you make is disregarded if you *acquired the *CGT asset that is the *share before 20 September 1985.

104-135(6)    

You disregard a payment by a liquidator for the purposes of this section if the company ceases to exist within 18 months of the payment.

Note:

The payment will be part of your capital proceeds for CGT event C2 happening when the share ends.

104-135(7)    

You also disregard a payment that is *personal services income included in your assessable income, or another entity ' s assessable income, under section 86-15 .