CGT events affecting shares and units
You may have to pay tax on any capital gain you make on shares or units when a CGT event happens, such as when you sell them.
A CGT event can 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 by or merges with another company. This may result in a capital gain or capital loss for you.
A CGT event may also occur where you:
- redeem units in a managed fund by switching them from one fund to another
- receive a distribution (other than a dividend) from a unit trust or managed fund
- receive non-assessable payments from a company or trust
- own shares in a company that has been placed in liquidation or administration and the liquidator or administrator has declared the shares (or other financial instruments) worthless.
When there is a corporate restructure involving a specific corporate group we often publish a class ruling or fact sheet detailing the tax consequences of the restructure (see Events affecting shareholders).
You may be entitled to an income tax deduction if a listed investment company (LIC) pays you a dividend that includes an LIC capital gain amount (see You and your shares).
Special CGT rules apply if you:
- receive, from a company or trust, bonus shares, bonus units, or rights or options to acquire shares or units
- buy convertible notes or participate in an employee share scheme or a dividend reinvestment plan.
If you own shares or units, some events which may result in a capital gain or loss include: switching units in a managed fund from one fund to another, acquiring or disposing of shares as a result of a takeover or merger, and receiving bonus shares or units.