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Tax Laws Amendment (2004 Measures No. 5) Bill 2004
Schedule 4 CGT event G3

   

Income Tax Assessment Act 1997

1  Section 104-5 (table item dealing with CGT event G3)

Repeal the item, substitute:

G3 Liquidator or administrator declares interests in a company worthless

[See section 104-145]

when declaration is made

no capital gain

interests’ reduced cost base

2  Section 104-145

Repeal the section, substitute:

104-145   Liquidator or administrator declares interests worthless: CGT event G3

             (1)  CGT event G3 happens if you own an interest in a company of a kind referred to in subsection (3) 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)  there is no likelihood that owners of interests of that kind, or of a class of interests that includes interests of that kind, will receive any further distribution for those interests; or

                     (b)  for a right, option or similar interest—the interest has no value or has only negligible value.

             (2)  The time of the event is when the declaration is made.

             (3)  The kinds of interests are:

                     (a)  * shares issued by the company; and

                     (b)  notes or * convertible notes issued by the company; and

                     (c)  other similar financial assets issued by the company; and

                     (d)  rights or options to acquire interests of a kind referred to in a preceding paragraph.

             (4)  You can choose to make a capital loss equal to the * reduced cost base of your interest (as at the time of the declaration).

             (5)  If you make the choice, the * cost base and * reduced cost base of the interest is reduced to nil just after the declaration is 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 interest.

Exception

             (6)  You cannot choose to make a * capital loss if you * acquired the interest before 20 September 1985.

3  Section 112-45 (table item dealing with CGT event G3)

Omit “A liquidator declares shares to be worthless”, substitute “A liquidator or administrator declares interests in a company to be worthless”.

4  Section 136-10 (table item dealing with CGT event G3)

Repeal the item, substitute:

G3

Liquidator or administrator declares interests in a company worthless

the interests

3, 5, 7, 8, 9

5  Paragraph 165-115GB(1)(b)

Repeal the paragraph, substitute:

                     (b)  a liquidator or administrator of the company declares that interests in the company are worthless (CGT event G3).

6  Subsection 165-115H(2)

After “declaration by a liquidator”, insert “or administrator”.

7  Section 165-115N

Repeal the section, substitute:

165-115N   Alteration time—declaration by liquidator or administrator

                   If a liquidator or administrator makes a declaration referred to in section 104-145 in relation to a company, the time of the declaration is also an alteration time in respect of the company.

8  Application

The amendments made by this Schedule apply to declarations by liquidators or administrators made after the day on which this Act receives the Royal Assent.