Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1997 - SECT 104.135

  (1)   CGT event G1 happens if:

  (a)   a company makes a payment to you in respect of a * share you own in the company (except for * CGT event A1 or C2 happening in relation to the share); and

  (b)   some or all of the payment (the non - assessable part ) is not a * dividend, or an amount that is taken to be a dividend under section   47 of the Income Tax Assessment Act 1936 ; and

  (c)   the payment is not included in your assessable income.

The payment can include giving property: see section   103 - 5.

  (1A)   In working out the non - assessable part, disregard any part of the payment that is:

  (aa)   * non - assessable non - exempt income; or

  (a)   repaid by you; or

  (b)   compensation you paid that can reasonably be regarded as a repayment of all or part of the payment; or

  (c)   an amount referred to in section   152 - 125 (which exempts a payment of a small business 15 - year exemption amount) as an exempt amount.

The payment can include giving property: see section   103 - 5.

  (1B)   However, the non - assessable part   is not reduced by any part of the payment that you can deduct.

  (2)   The time of the event is when the company makes the payment.

  (3)   You make a capital gain if the amount of the non - assessable part   is more than the * share's * cost base. If you make a * capital gain, the share's * cost base and * reduced cost base are reduced to nil.

Note 1:   You cannot make a capital loss.

Note 2:   A capital gain under former section   160ZL of the Income Tax Assessment Act 1936 is also taken into account for the purposes of this subsection: see section   104 - 135 of the Income Tax (Transitional Provisions) Act 1997 .

  (4)   However, if the amount of the non - assessable part   is not more than the * share's * cost base, that cost base and its * reduced cost base are reduced by the amount of the non - assessable part.

Note:   Cost base adjustments are made only under Subdivision   125 - B if there is a roll - over under that Subdivision for CGT event G1 happening as a result of a demerger.

Exceptions

  (5)   A * capital gain you make is disregarded if you * acquired the * CGT asset that is the * share before 20   September 1985.

  (6)   You disregard a payment by a liquidator for the purposes of this section if the company ceases to exist within 18 months of the payment.

Note:   The payment will be part of your capital proceeds for CGT event C2 happening when the share ends.

  (7)   You also disregard a payment that is * personal services income included in your assessable income, or another entity's assessable income, under section   86 - 15.