I am not sure how to calculate a pre-Capital Gains Tax (CGT) proportion. I want to understand the basis of the calculation prior to getting some professional advise. Can I get an example of pre-CGT proportion?
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Answer by Anton Joseph, Strathfield South 2136 NSW
- Here is an example that may help.
- On 30 June 2014 company A holds 800 shares of the 1000 shares in company B.
- On 1 July 2014 company A acquires the remaining 200 shares of company B thus wholly owning company B.
- Company B becomes a subsidiary of company A on 1 July 2014.
- On 1 July 2014 the market value of the shares of company B is $10.
- The pre-CGT proportion of company A’s membership interest in company B is therefore 10 x 800 / 10 x 1000 = 80%.