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  • How do I treat the capital gain?

    If you made a capital gain on this CGT event, you must include it in your calculations when completing item 17 on your 2004-05 tax return (supplementary section).

    The method you use to work out the amount to include in your item 17 calculations depends on when you acquired the shares. The following tables sets out what method you can use.

    If you acquired your AMP shares:

    You calculate your capital gain using the:

    before 21 September 1999

    indexed cost base or discount method, whichever gives you the better result*

    on or after 21 September 1999 and before 16 June 2004

    discount method (after applying any capital losses - including unapplied capital losses from previous years)

    on or after 16 June 2004

    other method.

    * If you choose to index the cost base of shares you acquired before 21 September 1999, you cannot apply the CGT discount when you dispose of them.

    For information on the different methods you can use to work out your capital gain, see the Guide to capital gains tax 2004-05.

    Note

    If you did not make a capital gain on the return of capital, there is nothing you need to include on your 2004-05 tax return regarding this CGT event.

    Example 1

    Michael purchased 200 AMP shares in December 2001. At the time of the capital return on 16 June 2005, the cost base of these shares (includes the cost of the shares and brokerage and stamp duty) was $2,720 or $13.60 per share.

    Michael received a total of $80 (200 x $0.40) in the return of capital.

    Michael must adjust the cost base and reduced cost base of his AMP shares by subtracting the amount of the capital return. The new cost base for his share parcel is $2,640 ($2,720 - $80), or $13.20 per share.

    Michael has not made a capital gain on his shares as a result of the capital return so he does not have to put anything on his tax return to reflect this event.

    Example 2

    Patricia bought 300 AMP shares in January 2003. She sold the shares on 9 June 2005. Consequently, Patricia held no AMP shares at the time of the capital return on 16 June 2005.

    Because she held AMP shares on the record date (26 May 2005), Patricia is eligible to receive the capital return. Patricia received $120 (300 x $0.40) in the return of capital.

    Calculating the capital gain

    Patricia made a capital gain from the return of capital as follows:

    Capital proceeds (300 x $0.40)

    $120

    less total cost base (300 x $0.00)

       $0

    Capital gain

    $120

    Because Patricia had held the shares for which the capital return was paid for more than 12 months, she applies the CGT discount to her capital gain (if she had capital losses she would offset them against her capital gain before applying the discount). If Patricia has no capital losses and applies the CGT discount, she will include a $60 ($120 x 50%) net capital gain on her tax return for the year ended 30 June 2005.

    Recording the capital gain on the tax return

    Assuming she had no other capital gains and no capital losses for the 2004-05 year, Patricia would complete item 17 on her 2005 tax return (supplementary section) showing:

    Did you have a capital gains tax event during the year? Yes

    Net capital gain: $60

    Total current year capital gains: $120

      Last modified: 06 Oct 2009QC 18163