ATO Interpretative Decision

ATO ID 2003/823 (Withdrawn)

Income Tax

Capital gains tax: CGT event G3 - Harris Scarfe Holdings Ltd (in liquidation)
FOI status: may be released

This ATO ID is withdrawn as it does not contain an interpretive decision. Instead it provides tax law clarification to a particular taxpayer group in a specific situation.
Commissioner's Determinations' TD 2000/52 and TD 2002/3 are ATO views for CGT consequences of declarations made by liquidators and administrators to cover both shares and financial instruments. Subsequent legislative amendments to section 104-145 of ITAA 1997 have also broadened the application of the provisions

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Status of this decision: Decision Withdrawn 12 March 2010

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Can a shareholder of Harris Scarfe Holdings Ltd (Harris Scarfe) choose to make a capital loss under CGT event G3 in section 104-145 of the Income Tax Assessment Act 1997 (ITAA 1997) in the 2002-03 income year?

Decision

Yes. The liquidators of Harris Scarfe made a written declaration on 30 June 2003 that they have reasonable grounds to believe there is no likelihood that the company's shareholders will receive any further distribution in the course of winding up the company.

Therefore, Harris Scarfe shareholders can choose to make a capital loss in the 2002-03 income year equal to the reduced cost base of each of their Harris Scarfe shares.

Facts

The taxpayer acquired shares in Harris Scarfe after 19 September 1985.

On 3 January 2002 a resolution was passed to wind up Harris Scarfe and liquidators were appointed to the company on this date.

On 30 June 2003 the liquidators declared they have reasonable grounds to believe there is no likelihood that Harris Scarfe shareholders will receive any further distribution in the course of winding up the company.

Reasons for Decision

CGT event G3 happens when the liquidator of a company makes a written declaration that they have reasonable grounds to believe there is no likelihood that the company's shareholders will receive any further distribution in the course of winding up the company (subsections 104-145(1) and 104-145(2) of the ITAA 1997).

A shareholder of such a company can choose to make a capital loss equal to the reduced cost base of each of their shares as at the time of the declaration (subsection 104-145(3) of the ITAA 1997).

In this case, the liquidators of Harris Scarfe made a declaration for the purposes of section 104-145 of the ITAA 1997 on 30 June 2003. Therefore, CGT event G3 happened when the declaration was made. Consequently, a taxpayer who owned shares in Harris Scarfe when the declaration was made can choose to make a capital loss in the 2002-03 income year equal to the reduced cost base of each of their Harris Scarfe shares at the declaration time.

Date of decision: 18 August 2003

Year of income: Year ended 30 June 2003

Legislative References:
Income Tax Assessment Act 1997
   section 104-145
   subsection 104-145(1)
   subsection 104-145(2)
   subsection 104-145(3)

Keywords
Capital losses
CGT events G1-G3 - shares
Liquidation
Winding up

Business Line: Losses and Capital Gains Tax Centre of Expertise

Date of publication: 12 September 2003
Date reviewed: 28 March 2018

ISSN: 1445-2782

history

	Date:	Version:
	18 August 2003	Original statement
You are here →	12 March 2010	Archived

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