Commonwealth Consolidated Acts

TAX LAWS AMENDMENT (2004 MEASURES NO. 6) ACT 2005 - SCHEDULE 8

Income Tax Assessment Act 1997

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

Repeal the item, substitute:

2   Section   104 - 145

Repeal the section, substitute:

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

  (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.

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

  (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.

  (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).

  (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

  (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.

  (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.

  (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 Income Tax Assessment Act 1936 ), or would have so acquired apart from section   139DD of that Act, under an * employee share scheme.

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 shares or financial instruments to be worthless".

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

Repeal the item, substitute:

5   Paragraph 165 - 115GB(1)(b)

Repeal the paragraph, substitute:

  (b)   a liquidator or administrator of the company declares that shares or financial instruments 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.