1 Can you apply the CGT roll-over contained in Subdivision 124-B of the Income Tax Assessment Act 1997 (ITAA 1997) to the capital gain resulting from the re-purchase of shares sold without your consent?
1 Yes. You are entitled to choose the rollover as the shares you owned were considered lost when they were sold at market without your consent (paragraph 124-70(1)(b) of the ITAA 1997). You repurchased the same number of shares (the replacement shares) within X months of the CGT event, the shares did not become items of your trading stock and they are not depreciating assets under Division 40 of the ITAA 1997. The cost of the replacement shares was more than the cost base of the original asset, just before the event happened. Therefore, as all of the requirements for the rollover are satisfied, you are entitled to choose the rollover to disregard the capital gain you made from the disposal of the original shares. Question 2 Did CGT event C1 happen on X July 20XX when you were deposited the funds from the sale of the shares? Answer 2 Yes. CGT event C1 in section 104-20 of the ITAA 1997 happens if a CGT asset you own is lost or destroyed. If you receive compensation, the time of the event is when you receive that compensation. You received compensation for the loss of your shares on X July 20XX. Therefore, CGT event C1 happened at that time.
This ruling applies for the following period: Year ended 30 June 20XX The scheme commenced on: 1 July 20XX
You held shares for long-term investment. Your broker liquidated the shares without prior notice or consent due to a policy change. You received the funds from the liquidated shares on X July 20XX. In an attempt to restore your investment position and mitigate losses, you established an account with a new broker and re-purchased the shares on XX July 20XX. The re-purchase of the shares resulted in a CGT liability.
Income Tax Assessment Act 1997 Subdivision 124-B Income Tax Assessment Act 1997 section 104-20