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Edited version of private advice
Authorisation Number: 1052217542713
Date of advice: 13 February 2024
Ruling
Subject: CGT - deregistration of company - capital loss
Question
Was there a capital gains tax event when the company you invested in was deregistered?
Answer
Yes.
CGT event C2 happens if your ownership of an intangible 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 Administration Act 1997 (ITAA 1997). The time of the event is when you enter into the contract that results in the asset ending; or if there is no contract, when the asset ends.
When a company is deregistered, it ceases to exist. At that time, its debts, if any, are abandoned, surrendered or forfeited for the purposes of section 104-25 of the ITAA 1997, and CGT event C2 will happen.
Your capital loss was realised on the date the company was deregistered with ASIC.
This private ruling applies for the following period:
Year ended 30 June 20XX.
The scheme commenced on:
1 July 20XX.
Relevant facts and circumstances
You invested $XX,XXX in a Company via the Company's manager (the Manager).
A short time later you invested a further $XX,XXX in the Company via the Manager.
In total you invested $XX,XXX for a XX% share in the Company.
A short time later the Company was registered with ASIC.
A few months later you were given a PDF document showing the Company's registration and share distribution by the Manager.
Between the registration of the Company and deregistration of the Company you contacted the Manager for updates on the Company.
Approximately five years after the Company was registered with ASIC you were advised by the Manager that the Company had been deregistered.
The company was deregistered with ASIC.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 102-20
Income Tax Assessment Act 1997 section 104-25
Income Tax Assessment Act 1997 section 108-5
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