DECLARATIONS (by an administrator or liquidator)

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 *qualifying share if:

(a) you did not make an election for the *share under section 139E of the Income Tax Assessment Act 1936 for the income year in which you acquired (within the meaning of Subdivision C of Division 13A of Part III of that Act) the share; and

(b) the declaration was made no later than 30 days after the *cessation time for the share.

104-145(8) 

You cannot choose to make a *capital loss for a financial instrument that is a right you acquired (within the meaning of Subdivision C of Division 13A of Part III of the Incometd width=right Tax Assessment Act 1936), or would have so acquired apart from section 139DD of that Act, under an *employee share scheme.