Private ruling: Unmarketable parcel of shares
Published: June 2012
Ruling period: Year ending 30 June 2012
Date scheme commenced: 1 July 2011

Ruling: Q1: Can shares that cannot be sold be sold be 'written off' for capital gains tax (CGT) purposes? | A1: No.

Relevant facts and circumstances: You own X shares individually and Y shares jointly in an ASX listed company which are currently valued at significantly less than their purchase cost (when you applied for your private ruling).

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 100-20 | Income Tax Assessment Act 1997 Section 104-5

Reasons for decision: Summary: Section 100-20 of the ITAA 1997 states you can make a capital gain or loss only if a CGT event happens. Section 104-5 of the ITAA 1997 lists a summary of CGT events, from CGT event A1 to CGT event L8. CGT events in relation to shares include: CGT event A1: Disposal of a CGT asset CGT event C2: Cancellation, surrender and similar endings CGT event G3: Liquidator or administrator declares shares or financial instruments worthless In your case, where a disposal, cancellation or declaration of worthlessness has not occurred in relation to your shares, you cannot claim a capital loss in relation to those shares. The CGT legislation does not contain any provisions to 'write off' a CGT asset in the event it cannot be sold, cancelled or declared worthless by a liquidator or administrator. We recommend you seek advice from a share market broker.

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