Worthless Shares - Claiming a Capital Loss

Last updated June 2011

The laws in relation to claiming capital losses where shares have been declared worthless have changed from 21 March 2005.

Previously, shareholders had to wait until a liquidator made a written declaration that they have reasonable grounds to believe there is no likelihood that shareholders will receive any further distribution for their shares. Under the new rules a shareholder can choose to realise a capital loss if a company administrator (not just a liquidator) makes such a declaration.

If you want to check whether a company has had an administrator or liquidator appointed, you can check the website www.delisted.com.au

If you have shares in a company that is in this situation you may be able to realize a capital loss equal to the cost base of the shares. You could then use this loss to offset other capital gains you may have made in that income year.

Note: If you do not choose to offset the capital loss in the relevant income year you will not be able to realize that capital loss until the shares are disposed of (ie. the company is dissolved).

If you have any queries please contact us to discuss your options.