Return of initial capital to shareholder

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 · Accepted Answer

TaxedoMask · Answer

When you say initial capital contribution - is this structured as a loan or equity. That is, when you registered the shares with ASIC - is it $700,000 for 1 share - for shareholder A, and $1 for 1 share for shareholders B and C? If its a loan - then the repayment will (generally speaking) not trigger any tax consequences. If its equity - then get professional advice as its likely that you'll fall afoul of 45A from which things get... complicated. Also with returns of capital I would also keep CGT Event G1 in the back of my mind.

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