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Legal database

Draft Taxation Determination

TD 93/D28

Income tax: capital gains: what is the amount of the consideration received in respect of the disposal of an asset where the consideration consists of shares which will be delivered at a later date and decline in value prior to delivery?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 93/43.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. The consideration in respect of the disposal of such an asset is the market value of the shares on the date of disposal of the asset (paragraph 160ZD(1)(b) of the Income Tax Assessment Act 1936).

Note: It has been suggested that section 160ZF applies in this situation. This section does not apply because it is confined to situations where the whole or part of the consideration has not been and is not likely to be received.

Example:

On 1 January 1990, Anne sells her block of land valued at $50,000 for 10,000 shares in X Ltd to be delivered in 18 months time. At the time the land was sold, the shares had a market value of $5 each. At 1 July 1991, the market value of the shares had declined to $1.25 each.
The consideration for the disposal of the land is the market value of the shares at 1 January 1990 viz. $5 x 10,000 = $50,000.

Commissioner of Taxation
18 February 1993

References


BO BXH0019 (CGTDET45)

ISSN 1038 - 8982

Related Rulings/Determinations:

TD 93/D15
TD 93/D29

Subject References:
consideration not in cash
disposal of asset
market value
shares delivered at a later date

Legislative References:
ITAA 160ZD(1)(b)
ITAA 160ZF


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