Example 1
Capital gain on the sale of demutualisation shares: no CGT discount
When OFM Ltd demutualised, Christine received 500 OFM shares. She sold them on 1 June 2002 for $2.10 each. There were no brokerage costs associated with the sale. The shares had a cost base of $1.65 each.
Because Christine did not own her shares for at least 12 months, she did not qualify for the 50% CGT discount. Christine had a capital gain of $225 [500 x ($2.10 - $1.65)] in the 2001-02 year from the sale of her shares.
Example 2
Capital gain on the sale of demutualisation shares: CGT discount
When OFM Ltd demutualised, Jack received 1,400 OFM shares. He sold them on 30 March 2005 for $2.06 each. Jack incurred $50 brokerage costs on the sale. The shares had a cost base of $1.65 each.
Because Jack owned his shares for at least 12 months, he can reduce his capital gain by the 50% CGT discount (after applying any capital losses). Because Jack had no capital losses and no other capital gain for the year, his net capital gain for the year is calculated as follows:
Capital proceeds (1,400 x $2.06) |
$2,884 |
Cost base [(1,400 x $1.65) + $50 brokerage] |
$2,360 |
$524 |
|
less: 50% CGT discount |
$262 |
Net capital gain |
$262 |
Jack includes $262 in his 2004-05 tax return.
Example 3
Capital loss on the sale of demutualisation shares before OFM was listed on the ASX
Barry sold his 500 OFM shares for $0.62 each in January 2002. Based on an expected reduced cost base of $1.65 per share, Barry worked out he had made a capital loss on the sale of $515 (500 x [$1.65 - $0.62]). Barry subtracted this amount from his other capital gains in working out the net capital gain he included in his 2001-02 tax return.
Because Barry sold his shares before OFM was listed on the ASX, he was not entitled to the $515 capital loss. He recalculates his net capital gain for 2001-02 ignoring the $515 capital loss he claimed and requests an amendment.