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Capital Gains and Renounceable Rights
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Article archive
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Quarter 4 October - December 2017
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Quarter 4 October - December 2016
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Quarter 4 October - December 2015
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Quarter 3 July - September 2015
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Quarter 1 January - March 2015
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Quarter 4 October - December 2014
Quarter 2 of, 2015 archive
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SMSFs may be missing out on allowable deductions
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Change to Early Access Rules
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Capital Gains Tax – which year?
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Checklist for Employers Year-end
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Year-end Tax Planning – Trusts
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Year-end Tax Planning – Small Business
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Reminders and Tax Strategies for SMSFs pre-year end
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Year-end Tax Planning – Individuals
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Overtime Payments May Eliminate Claims for Unfair Dismissal
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Tips and traps for acquiring SMSF assets from related parties
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ACCC issues scam warning
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SME Dispute Resolution
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Land Tax – Victoria
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R&D incentives at risk
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ATO adds ‘hot issue’ to its SMSF target list
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Additional Super Contributions Not Appropriate for all
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Issues arising from an underpaid pension
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Salary and Superannuation after the death of an employee
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IPA calls for zero pc tax rate
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Budget 2015 - some professional opinions
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Australian Government - Budget 2015
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Looming end to SMSF Borrowings?
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ATO warns SMSFs on franking credits scheme
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Lump Sum Payments - Employer Reporting
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Small business tax cuts 'not enough', says IPA
Capital Gains and Renounceable Rights

In a small win, the taxation of renounceable rights offers (in some cases) will be concessionally treated following a recent Australian Taxation Office ruling.

       

 

The taxation of rights and premiums paid to retail shareholders has improved where those shares are held on capital account.

If the shareholder is an Australian resident then there is no assessable income on the timing of the grant of the entitlement and any retail premium received, can be treated us the realisation of a CGT asset.  Most years at least one large public company structure an equity deal to provide this opportunity to its shareholders – in 2016 it included Origin, in 2017 it included Boral, JB Hi-Fi, and Vocus Communications.

The right to be issued shares is a CGT asset, which if no action is taken and the resultant is sale by the company and subsequent premium is paid to the shareholder, capital gain will result.  What is more significant is that the shareholder is considered to have required the rights when it acquired the original shares.  There is a discount capital gain (i.e. 50%) if the shares were held for twelve months or longer.

 

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