Division 104 - CGT events  

Subdivision 104-C - End of a CGT asset  

SECTION 104-25   Cancellation, surrender and similar endings: CGT event C2  


CGT event C2 happens if your ownership of an intangible *CGT asset ends by the asset:

(a) being redeemed or cancelled; or

(b) being released, discharged or satisfied; or

(c) expiring; or

(d) being abandoned, surrendered or forfeited; or

(e) if the asset is an option - being exercised; or

(f) if the asset is a *convertible interest - being converted.


The time of the event is:

(a) when you enter into the contract that results in the asset ending; or

(b) if there is no contract - when the asset ends.


You make a capital gain if the *capital proceeds from the ending are more than the asset ' s *cost base. You make a capital loss if those capital proceeds are less than the asset ' s *reduced cost base.

The capital proceeds referred to in this subsection are reduced if the gain or loss was for shares and an amount was taken into account as a capital gain for the shares under former section 160ZL of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year: see section 104-25 of the Income Tax (Transitional Provisions) Act 1997 .


A lease is taken to have expired even if it is extended or renewed. Exceptions


A *capital gain or *capital loss you make is disregarded if:

(a) you *acquired the asset before 20 September 1985; or

(b) for a lease that you granted:

(i) it was granted before that day; or

(ii) if it has been renewed or extended - the start of the last renewal or extension occurred before that day.
Note 1:

There are other exceptions if:

  • · your lease expires and you did not use it mainly to produce assessable income: see section 118-40 ; or
  • · you exercise rights to acquire shares or units: see section 130-40 ; or
  • · you acquire shares or units by converting a convertible interest: see section 130-60 ; or
  • · you exercise an option: see section 134-1 .
  • Note 2:

    A company can agree to forgo any capital loss it makes as a result of forgiving a commercial debt owed to it by another company where the companies are under common ownership: see section 245-90 .

    Note 3:

    A capital gain or loss a company makes because shares in its 100% subsidiary are cancelled (an example of CGT event C2) on the liquidation of the subsidiary may be reduced if there was a roll-over for a CGT asset under Subdivision 126-B : see section 126-85 .

    Note 5:

    Cost base adjustments are made only under Subdivision 125-B if there is a roll-over under that Subdivision for CGT event C2 happening as a result of a demerger.

    Note 6:

    A capital gain or loss made by a demerging entity from CGT event C2 happening as a result of a demerger is also disregarded: see section 125-155 .

    Note 7:

    A capital gain or loss you make from the meeting of your entitlement under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 or Part VC (Financial claims scheme for account-holders with insolvent general insurers) of the Insurance Act 1973 is disregarded: see sections 253-10 and 322-30 of this Act.

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