Subdivision 768-G of ITAA 1997

This subdivision governs the reduction in capital gains and losses arising from capital gains tax events relating to portfolio investments in active foreign companies.

The gain or loss is reduced by a percentage that reflects the degree to which the assets of the foreign company were used in an active business where a company meets both of these conditions:

  • it has a capital gain or capital loss arising from a capital gains tax event which relates to a share in a foreign company
  • it holds a direct voting percentage of 10% or more in the foreign company for a certain period before the capital gains tax event happens.

Example of Subdivision 768-G of ITAA 1997

Capital gains tax events

The concession under Subdivision 768-G of the ITAA 1997 applies to the following capital gains tax events:

A1 - disposal of a capital gains tax asset - section 104-10 of the ITAA 1997

B1 - use and enjoyment before title passes - section 104-15

C2 - cancellation, surrender and similar endings - section 104-25

E1 - creating a trust over a capital gains tax asset - section 104-55

E2 - transferring a capital gains tax asset to a trust - section 104-60

G3 - liquidator declares shares worthless - section 104-145

J1 - company stops being member of wholly owned group after rollover -section 104-175

K4 - capital gains tax asset starts being trading stock - section 104-220

K6 - pre-capital gains tax shares or trust interest - section 104-230

K10 - foreign exchange realisation gain - item 1 of the table in subsection 775-70 (1) and section 104-260

K11 - foreign exchange realisation loss - item 1 of the table in subsection 775-75 (1) and section 104-265.

    Last modified: 21 Feb 2012QC 25356