I have a question about capital gains. A owns a company called ABC Pty Ltd. He provided a loan to the company in the form of a director's loan, amounting to 1 million. With this loan, the company purchased a property worth 1 million. After 3 years, B gave A 700,000, acquiring 100% ownership of ABC Pty Ltd. In this process, did A or ABC Pty Ltd incur any capital loss?
Hi again @BARBARAGROUP,
Ordinarily, selling or disposing of a CGT asset will trigger a CGT event. Where A has disposed of the shares to B, this will trigger a CGT event (A1 being very common).
Firstly, you work out what the capital proceeds are. If the amount received is other than the market value of the CGT asset, the market value substitution (or another) integrity rule may operate to replace the proceeds in the calculation. Secondly, you work out the cost base or reduced cost base of the CGT asset.
The director’s loan, the ownership (shares) in ABC Pty Ltd, and the property purchased by ABC Pty Ltd are all separate CGT assets. After working out which event has occurred to which asset, you then calculate your CGT to determine whether you made a capital gain or capital loss. It's important to note that the director loan provided to the company is a separate CGT asset and doesn't form a part of the cost base of the property purchased by ABC Pty Ltd.
Hi @BARBARAGROUP - we're just waiting on some expert advice and will be back with an answer ASAP.
Hi again @BARBARAGROUP,
Ordinarily, selling or disposing of a CGT asset will trigger a CGT event. Where A has disposed of the shares to B, this will trigger a CGT event (A1 being very common).
Firstly, you work out what the capital proceeds are. If the amount received is other than the market value of the CGT asset, the market value substitution (or another) integrity rule may operate to replace the proceeds in the calculation. Secondly, you work out the cost base or reduced cost base of the CGT asset.
The director’s loan, the ownership (shares) in ABC Pty Ltd, and the property purchased by ABC Pty Ltd are all separate CGT assets. After working out which event has occurred to which asset, you then calculate your CGT to determine whether you made a capital gain or capital loss. It's important to note that the director loan provided to the company is a separate CGT asset and doesn't form a part of the cost base of the property purchased by ABC Pty Ltd.
15 Apr 2026 · 4 min read time
15 Apr 2026 · 8 min read time
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