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Class ruling applications – share buy-backs

How to make a request for a class ruling for share buy-backs or capital reductions.

Last updated 31 July 2025

Class rulings for share buy-backs and capital reductions

A request for a class ruling for share buy-backs or capital reductions must be in writing and include:

  • a detailed description of all facts relevant to the scheme, including
    • details about the principals carrying out the scheme
    • details of the number and class of entities subject to the scheme
    • if the buy-back or capital reduction is equal or selective
    • commercial reasons why the buy-back or capital reduction is being undertaken
    • documents you refer to in your request, as attachments
  • clear questions about provisions to be ruled on, including any issues with a detailed review of the provisions as well as the results of any research
  • the sources of funds used for the share buy-back or capital reduction
  • the methodology used to allocate the price to share capital, retained earnings and reserves
  • how the shares were valued, see Market valuation for tax purposes
  • to what extent any dividend component or dividend amount is to be franked or treated as conduit foreign income
  • if some of the distribution is property (including an in specie distribution of shares), a description of the property, its nature and market value
  • the latest set of financial accounts no more than 6 months old
  • the balance of the franking account and projected movements up to the time of the buy-back or capital reduction
  • dividend and other distribution history for the last few years
  • details about shareholder profile including
    • a breakdown between residents and non-residents
    • the proportion of pre-CGT and post-CGT shares
    • an analysis of cost bases or market value of shares for the last few years
  • any recent or contemplated significant events including any disposals, capital raisings and restructures
  • a statement that the share capital account is untainted (within the meaning of section 197-50 of the Income Tax Assessment Act 1997 (ITAA 1997)) and details of any amounts that have been transferred to the share capital account from other accounts after 30 June 2002
  • journal entries related to the buy-back or capital reduction.

For more information, see Class rulings.

Further class ruling considerations

When applying for a class ruling for a share buy-back or capital reduction you should also consider the following:

  • If the company is a listed public company, the buy-back price received by participating shareholders for an off-market share buy-back announced after 7:30 pm AEDT on 25 October 2022 will not contain a dividend component. The entire buy-back price paid will be treated as capital proceeds.
  • If the company proposing the buy-back or capital reduction is not a listed public company, we examine the buy-back timetable in relation to applying the holding period rule.
  • If you would like the class ruling to rule on whether shares held by foreign resident shareholders are 'indirect Australian real property' interests, which often includes consideration of the 'principal asset test'. This is relevant with other tests to determine whether shares held by foreign residents are taxable Australian property for capital gains tax purposes.

For more information, see:

QC18182