Share Buy-Backs.

As a shareholder, you may have received an offer from a company to buy back some or all of your shares in the company. If you disposed of shares back to the company under a share buy-back arrangement, you may have made a capital gain or capital loss from that CGT event.

You compare the capital proceeds with your cost base and reduced cost base to work out whether you have made a capital gain or capital loss.

The time you make the capital gain or capital loss will depend on the conditions of the particular buy-back offer. It may be the time you lodge your application to participate in the buy-back or, if it is a conditional offer of buy-back, the time you accept the offer.

If shares in a company: are not bought back by the company in the ordinary course of business of a stock exchange – for example, the company writes to shareholders offering to buy their shares (commonly referred to as ‘off-market share buyback’), and the buy-back price is less than what the market value of the share would have been if the buy-back hadn’t occurred and was never proposed the capital proceeds are taken to be the market value the share would have been if the buy-back hadn’t occurred and was never proposed minus the amount of any dividend paid under the buy-back.

In this situation, the company may provide you with that market value or, if the company obtained a class ruling from us, you can find out the amount by visiting our website at www.ato.gov.au

Under other off-market buy-backs where a dividend is paid as part of the buy-back, the amount paid excluding the dividend is your capital proceeds for the share.




	
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