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Edited version of your written advice
Authorisation Number: 1051270887374
Date of advice: 17 August 2017
Ruling
Subject: Income Tax – Capital Gain – Event C2
Question 1
Can you claim a capital loss on a loan provided to a company that has been liquidated?
Answer
Yes.
CGT event C2 happens if your ownership of an intangible capital gains tax asset (CGT) asset ends by the asset expiring or by it being released, discharged, redeemed, cancelled, abandoned, surrendered, or forfeited (subsection 104-25(1) of the Income Tax Assessment Act 1997 (ITAA 1997)). When the company is deregistered the company’s debts, if any, are abandoned, surrendered or forfeited for the purposes of section 104-25 of the ITAA 1997. As such, CGT event C2 happened to the debt owed to you by the Company when it was deregistered in the 201Y financial year. You are entitled to a capital loss for the money you lent to the company.
This ruling applies for the following periods:
Year ending 30 June 201Y
The scheme commences on:
1 July 201X
Relevant facts and circumstances
You lent money to a company of which you were a director and shareholder.
The company went into liquidation and has been deregistered.
You expected to receive dividends from the company at some point in the future.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-25
Income Tax Assessment Act 1997 subsection 104-25(1)
Income Tax Assessment Act 1997 section 108-5
Income Tax Assessment Act 1997 subsection 116-30(1)
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