Private ruling: Capital losses
Published: November 2014
Ruling period: Year ending 30 June 2015
Date scheme commenced: 1 July 2014

Ruling: Q1: Are you entitled to declare a capital loss in relation to your shares? | A1: No.

Relevant facts and circumstances: You purchased shares in a company. You paid approximately $X for the shares. Through a combination of takeovers, stock consolidation and very poor returns these shares are now worth approximately $Y. You are unable to sell the shares unless you pay additional funds to either a broker or to set up an international brokerage account. There has been no declaration made by liquidators or administrators that the shares are worthless.

Relevant legislative provisions: Income Tax Assessment Act 1997 section 104-10

Reasons for decision: Summary: Section 104-10 of the Income Tax Assessment Act 1997 (ITAA 1997) provides that capital gains tax (CGT) event A1 happens to a taxpayer on the disposal of a CGT asset where there is a change of ownership from the taxpayer to another entity. This change of ownership is taken to have occurred either upon entering a contract for the disposal of the asset, or if there is no contract, when the change of ownership occurs (subsection 104-10(3) of the ITAA 1997). In this case you have not disposed of your shares and no CGT event has occurred. Therefore, you are not entitled to declare a capital loss in relation to the shares.