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This edited version has been archived due to the length of time since original publication. It should not be regarded as indicative of the ATO's current views. The law may have changed since original publication, and views in the edited version may also be affected by subsequent precedents and new approaches to the application of the law.

You cannot rely on this record in your tax affairs. It is not binding and provides you with no protection (including from any underpaid tax, penalty or interest). In addition, this record is not an authority for the purposes of establishing a reasonably arguable position for you to apply to your own circumstances. For more information on the status of edited versions of private advice and reasons we publish them, see PS LA 2008/4.

Edited version of your private ruling

Authorisation Number: 1012581639494

Ruling

Subject: CGT losses

Question

Did you make a capital loss on your shares when the company was deregistered?

Yes.

This ruling applies for the following period

Year ended 30 June 2010

The scheme commenced on

21 August 2006

Relevant facts

You purchased shares.

The shares have been deregistered.

Relevant legislative provisions

Income Tax Assessment Act 1997 Section 102-5.

Income Tax Assessment Act 1997 Section 102-10.

Income Tax Assessment Act 1997 Section 102-15.

Income Tax Assessment Act 1997 Section 102-20.

Income Tax Assessment Act 1997 Paragraph 104-25(1)(a).

Income Tax Assessment Act 1997 Paragraph 104-25(2)(b).

Income Tax Assessment Act 1997 Subsection 104-25(3).

Income Tax Assessment Act 1997 Paragraph 104-145(1)(a).

Income Tax Assessment Act 1997 Subsection 104-145(2).

Income Tax Assessment Act 1997 Subsection 104-145(4).

Reasons for decision

You can make a capital loss when a company is deregistered in accordance with Corporations Law as your ownership of that company's shares ends at that time due to them being cancelled.

In your case, you have made a capital loss when the companies were deregistered.

Generally you make a capital loss if your reduced cost base is greater than your capital proceeds. The excess is your capital loss. 

Your capital loss can be calculated as follows:

Reduced cost base = Purchase price + Incidental costs of acquiring shares

Capital loss = Reduced cost base Capital proceeds (Nil)