Private ruling: Income Tax – Capital Gain – Event C2
Date of advice: 17 August 2017
Published: December 2017
Ruling period: Year ending 30 June 201Y
Date scheme commenced: 1 July 201X

Ruling: Q1: Can you claim a capital loss on a loan provided to a company that has been liquidated? | A1: Yes. CGT event C2 happens if your ownership of an intangible capital gains tax asset (CGT) asset ends by the asset expiring or by it being released, discharged, redeemed, cancelled, abandoned, surrendered, or forfeited (subsection 104-25(1) of the Income Tax Assessment Act 1997 (ITAA 1997)). When the company is deregistered the company’s debts, if any, are abandoned, surrendered or forfeited for the purposes of section 104-25 of the ITAA 1997. As such, CGT event C2 happened to the debt owed to you by the Company when it was deregistered in the 201Y financial year. You are entitled to a capital loss for the money you lent to the company.

Relevant facts and circumstances: You lent money to a company of which you were a director and shareholder. The company went into liquidation and has been deregistered. You expected to receive dividends from the company at some point in the future.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 102-20 | Income Tax Assessment Act 1997 section 104-25 | Income Tax Assessment Act 1997 subsection 104-25(1) | Income Tax Assessment Act 1997 section 108-5 | Income Tax Assessment Act 1997 subsection 116-30(1)