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  • Shares and units generally



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    For capital gains tax purposes, shares in a company or units in a unit trust are treated in the same way as any other assets. As a general rule, if you acquire any shares or units on or after 20 September 1985, you may have to pay tax on any capital gain you make when a CGT event happens in relation to those assets. As the most common CGT event affecting shares or units involves their sale or disposal - referred to as CGT event A1 - the terms 'dispose' and 'disposal' will be used throughout this chapter to refer to CGT event A1.

    A CGT event might happen to shares even if a change in their ownership is involuntary - for example, if the company in which you hold shares is taken over or merges with another company. This may give rise to a capital gain or loss.

    Not all CGT events referred to in this chapter involve the sale or disposal of shares or units. For example, the chapter also deals with the receipt of non-assessable distributions from a company (CGT event G1) and from a trust (CGT event E4) . If you own shares in a company that has been placed in liquidation, CGT event G3 explains how you can choose to make a capital loss when the liquidator declares shares worthless. You will find a list of all CGT events in appendix B.

    There are a number of special capital gains tax rules that can affect investors in shares or units if they receive such things as bonus shares, bonus units, rights, options or non-assessable distributions from a company or trust. Special rules also apply to investors who have bought convertible notes or participated in employee share schemes or dividend reinvestment plans.

    The rest of this chapter explains these rules and contains examples which show you how they work in practice. Flowcharts in appendix C will also help you work out how you could be affected by some of the special rules.

    More information on the general capital gains tax rules is available in chapter 1. Another publication, You and your shares, explains how the income tax provisions other than capital gains tax apply to your shares.

    Last modified: 18 Sep 2009QC 18323