(1) CGT event C2 happens if your ownership of an intangible * CGT asset ends by the asset:
(a) being redeemed or cancelled; or
(b) being released, discharged or satisfied; or
(c) expiring; or
(d) being abandoned, surrendered or forfeited; or
(e) if the asset is an option--being exercised; or
(f) if the asset is a * convertible interest--being converted.
(2) The time of the event is:
(a) when you enter into the contract that results in the asset ending; or
(b) if there is no contract--when the asset ends.
(3) You make a capital gain if the * capital proceeds from the ending are more than the asset's * cost base. You make a capital loss if those capital proceeds are less than the asset's * reduced cost base.
Note: The capital proceeds referred to in this subsection are reduced if the gain or loss was for shares and an amount was taken into account as a capital gain for the shares under former section 160ZL of the Income Tax Assessment Act 1936 for the 1997-98 income year or an earlier income year: see section 104-25 of the Income Tax (Transitional Provisions) Act 1997 .
(4) A lease is taken to have expired even if it is extended or renewed.
(5) A * capital gain or * capital loss you make is disregarded if:
(a) you * acquired the asset before 20 September 1985; or
(b) for a lease that you granted:
(i) it was granted before that day; or
(ii) if it has been renewed or extended--the start of the last renewal or extension occurred before that day.
Note 1: There are other exceptions if:
• your lease expires and you did not use it mainly to produce assessable income: see section 118-40; or
• you exercise rights to acquire shares or units: see section 130-40; or
• you acquire shares or units by converting a convertible interest: see section 130-60; or
• you exercise an option: see section 134-1.
Note 2: A company can agree to forgo any capital loss it makes as a result of forgiving a commercial debt owed to it by another company where the companies are under common ownership: see section 245-90.
Note 3: A capital gain or loss a company makes because shares in its 100% subsidiary are cancelled (an example of CGT event C2) on the liquidation of the subsidiary may be reduced if there was a roll-over for a CGT asset under Subdivision 126-B: see section 126- 85.
Note 5: Cost base adjustments are made only under Subdivision 125-B if there is a roll-over under that Subdivision for CGT event C2 happening as a result of a demerger.
Note 6: A capital gain or loss made by a demerging entity from CGT event C2 happening as a result of a demerger is also disregarded: see section 125- 155.
Note 7: A capital gain or loss you make from the meeting of your entitlement under Division 2AA (Financial claims scheme for account-holders with insolvent ADIs) of Part II of the Banking Act 1959 or Part VC (Financial claims scheme for account-holders with insolvent general insurers) of the Insurance Act 1973 is disregarded: see sections 253-10 and 322-30 of this Act.