Draft Taxation Determination

TD 94/D91

Income tax: capital gains: is a capital loss available under

• Please note that the PDF version is the authorised version of this draft ruling.
  This document has been finalised by TD 95/29.

FOI status:

draft only - for comment

Preamble

Part IIIA of the Income Tax Assessment Act 1936 for securities (other than shares) held in a company in liquidation if the liquidator has declared them to have no value?

1. No. The mere fact that the liquidator has declared that the securities (other than shares) have no value is not sufficient to be a disposal for CGT purposes. A capital loss, therefore, does not arise.

2. A disposal would occur where, for instance, an unconditional sale of a security to another person takes place (subsection 160M(1)) or where all rights under that security are legally and irrevocably surrendered, released or abandoned, e.g. by the taxpayer executing a deed of release in favour of the company (paragraph 160M(3)(b)).

Note: Section 160WA does not apply to securities other than shares. Broadly, section 160WA enables a shareholder in a company in liquidation to elect to treat shares as disposed of before dissolution of the company (see TD 92/102, TD 93/179). The section applies only to shares held in companies in liquidation which have been declared to be valueless by the liquidator.

Commissioner of Taxation
18 August 1994

References

ATO references:
NO

Related Rulings/Determinations:

IT 2643
TD 92/102
TD 93/179

Subject References:
capital loss
disposal
liquidation
securities other than shares
valueless securities

Legislative References:
ITAA 160M(1)
ITAA 160M(3)(b)
ITAA 160WA