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Edited version of your private ruling
Authorisation Number: 1012032856189
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Ruling
Subject: Capital gains tax - CSR Ltd - Return of capital
Question 1: Did you make a capital gain due to the payment of the return of capital to you?
Answer: No.
This ruling applies for the following period<s>:
2010-11 income year
The scheme commences on:
1 July 2010
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
You inherited some CSR Ltd (CSR) shares in late 20XX. Their cost base at that time was more than $0.6357 per share.
On X March 20XX, you received a return of capital in relation to your shareholding in CSR of $0.4357 for each of your shares.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 102-20 and
Income Tax Assessment Act 1997 Section 104-135.
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
Summary
You did not make a capital gain due to the payment of the return of capital to you.
Detailed reasoning
You can only make a capital gain or loss if a CGT event happens. CGT event G1 happened when CSR made the return of capital payment to you.
You did not make a capital gain due to the payment of the return of capital to you as the amount of the return of capital payment was less than the cost base of your CSR shares.
Instead, you must reduce the cost base (and reduced cost base) of your CSR shares to reflect the payment of the return of capital to you. The following table illustrates the effect of the return of capital payment by CSR:
Event |
Cost base - Per share |
Inheritance |
More than $0.6357 |
Less 2005 return of capital |
$0.20 |
Less 2011 return of capital |
$0.4357 |
New cost base |
Excess over $0.6357 |
Note: The table also makes the adjustment to the cost base for the 2005 return of capital payment made by CSR. (Please find enclosed a fact sheet in relation to this earlier return of capital payment.)