• I owned shares when I received the capital return on 21 July 2011

    Did I make a capital gain on the capital return?

    You made a capital gain if your cost base per share on 13 July 2011 was less than the amount of $0.1607 you received for each nib share. For each of these shares, you made a capital gain of $0.1607 minus the cost base of the share.

    If you had owned your nib shares for more than 12 months, you can apply the CGT discount to reduce the capital gain by half.

    For shares with a cost base equal to or greater than $0.1607, you have made no capital gain as a result of the return of capital.

    For information on how to work out the cost base (and reduced cost base) for shares, see the Guide to capital gains tax.

    Attention

    If you made a capital gain on this CGT event, you must include it in your calculations when completing the CGT item on your 2011-12 tax return (supplementary section).

    Note - if you did not make a capital gain on the return of capital, there is nothing you need to include on your 2011-12 tax return regarding this CGT event.

    End of attention

    How do I adjust the cost base (and reduced cost base) of my shares?

    Where you have made a capital gain, you reduce the cost base (and reduced cost base) of your nib shares to nil.

    Where you have not made a capital gain, you reduce the cost base (and reduced cost base) of each of your nib shares by $0.1607.

    If any of your shares had a cost base of exactly $0.1607, their new cost base and reduced cost base is nil.

    Example 1

    Duncan was issued 2,000 nib shares under the demutualisation of nib on 1 October 2007.

    The cost base of his shares was their market value on the day they were issued to him - this was $1,700, or $0.85 per share.

    There were no CGT events affecting the cost base of his shares before the capital return on 21 July 2011.

    Duncan was entitled to receive the capital return because he owned nib shares on 13 July 2011. Duncan still owned his 2,000 nib shares on 21 July 2011.

    Duncan received a total capital return of $321.40 (2000 x $0.1607) in the capital return.

    Duncan has not made a capital gain on his shares because the capital return amount of $321.40 he received is less than their cost base of $1,700. Duncan does not have to include anything on his 2011-12 tax return regarding this capital return.

    Duncan must adjust the cost base (and reduced cost base) of his nib shares by subtracting the amount of the capital return.

    The new cost base for his share parcel is $1,378.60 ($1,700 - $321.40), or $0.69 per share ($1,378.60 divided by 2,000 shares).

      Last modified: 03 Feb 2016QC 25067