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 104-145   Liquidator or administrator declares shares or financial instruments worthless: CGT event G3  

104-145(1)    
CGT event G3 happens if you own *shares in a company, or financial instruments issued by or created by or in relation to a company, and a liquidator or administrator of the company declares in writing that the liquidator or administrator has reasonable grounds to believe (as at the time of the declaration) that:

(a) for shares - there is no likelihood that shareholders in the company, or shareholders of the relevant class of shares, will receive any further distribution for their shares; or

(b) for financial instruments - the instruments, or a class of instruments that includes instruments of that kind, have no value or have only negligible value.

104-145(2)    
The time of the event is when the declaration was made.

104-145(3)    
Examples of financial instruments referred to in subsection (1) are:

(a) *debentures, bonds or promissory notes issued by the company; and

(b) loans to the company; and

(c) futures contracts, forward contracts or currency swap contracts relating to the company; and

(d) rights or options to acquire an asset referred to in a preceding paragraph of this subsection; and

(e) rights or options to acquire *shares in the company.

104-145(4)    
You can choose to make a capital loss equal to the *reduced cost base of your *shares or financial instruments (as at the time of the declaration).

104-145(5)    
If you make the choice, the *cost base and *reduced cost base of the *shares or financial instruments are reduced to nil just after the declaration was made.

Note:

This is for the purpose of working out if you make a capital gain or loss from any later CGT event in relation to the shares or financial instruments.

Exceptions

104-145(6)    
You cannot choose to make a *capital loss if:

(a) you *acquired the shares or financial instruments before 20 September 1985; or

(b) the shares or financial instruments were *revenue assets at the time when the declaration was made.

104-145(7)    

You cannot choose to make a *capital loss for a *share, or a right to acquire a beneficial interest in a share, if:

(a) you acquired the beneficial interest (the ESS interest ) in the share or right under an *employee share scheme; and

(b) subsequent to an amount being included in your assessable income under Division 83A (about employee share schemes) in relation to the ESS interest, section 83A-310 (about forfeiture) applies in relation to ESS interest.

104-145(8)    
(Repealed by No 133 of 2009)