It's a bad enough feeling for investors to see a company into which they put their hard-earned go down the gurgler, but the often-long insolvency process can provide further anguish and frustration when tax time rolls around each year.

Thanks to the work of former Australian Shareholders' Association executive director Tony McLean, the painful process of waiting sometimes years to claim a capital loss legally may now be substantially reduced.

Under improvements to the capital gains tax regime lobbied for by Mr McLean and revealed in Tuesday's budget, investors should be able to claim these losses more quickly against capital gains in their tax return.

Assistant Treasurer Helen Coonan announced that any insolvency practitioner, such as an administrator or receiver rather than purely the company's liquidator, could now declare a share worthless for end-of-year tax calculation purposes.

Some shareholders complained of delayed declarations in recent corporate collapses. In a classic example, a declaration to Pasminco shareholders has yet to be issued, despite its collapsing in 2001 and being rebirthed in the recent Australian Stock Exchange float of Zinifex (for which old Pasminco shareholders had to apply separately if they wanted a second try).

If such delays aren't bad enough, it's also often very difficult to get much information out of the insolvency fraternity, probably explained by the fact that shareholders are usually last in the hierarchy of creditors when a company goes broke.

This has led shareholders to finding ways to crystallise the capital loss legally, so it's claimable, including by transferring the shares into a trust - in other words selling the shares but usually for a peppercorn sum well below the cost.

But there's a cost involved in this transfer. In the case of the service provided by Mr McLean's Delisted.com.au website (whose primary aim is to provide free information about the progress of insolvencies of delisted companies), there's a standard charge of $76 to conduct the transfer, but it can be as much as $126 to cover applicable stamp duties.

Mr McLean says there are about 40 companies that have gone broke but for which their liquidators are yet to issue a declaration that the shares are worthless, affecting the tax returns of potentially thousands of shareholders.

One extreme case is the once-high flying property developer Jennings, which was suspended from trading on the stock exchange in 1995, but for which investors still can't claim their losses because there's no declaration.

In January, Mr McLean made a submission to the Parliamentary Joint Committee on Corporations and Financial Services, which is inquiring into Australia's corporate insolvency laws.

He noted cases such as a company re-emerging from administration although it had not relisted, and even though the shares were still worthless, the claim could not be made. Sometimes directors even changed the name of the company without advising shareholders, leaving them "in limbo".

"I think these changes will push the timing forward [to claim losses]," Mr McLean said.

"There have been circumstances where an administrator or receiver has made a declaration that there would be no return to shareholders and legally shareholders have not been able to take advantage of that."

Senator Coonan said in her statement on the changes, which still have to be passed into legislation: "Shareholders and other security holders will now be able to claim a capital loss once the insolvency practitioner makes the relevant declaration and will not have to incur the cost of establishing a trust.

"This will assist shareholders to close the book on worthless investments earlier and will remove a disincentive to investing in shares and securities."