When does capital gains tax affect my pre-CGT Pivot shares following the merger of Pivot and IFL?
Although pre-CGT assets are not generally subject to capital gains tax, special rules apply to pre-CGT shares in a company if 75% or more of the company’s net value is made up of post-CGT property. In these circumstances, a capital gain (but not a capital loss) may arise at the time a CGT event happens to your pre-CGT shares because of the special rules in CGT event K6. In the case of Pivot, more than 75% of the company’s net value consisted of post-CGT property following the Pivot-IFL merger. The special rules in CGT event K6 may therefore have application. There is an exemption from the special rules if some of the company’s shares have been continuously listed on an official stock exchange for the five years preceding the time at which the event happens to your pre-CGT shares. Because Pivot’s shares were first listed on the ASX on 28 July 2003, the five year stock exchange listing exemption will not apply to pre-CGT Pivot shareholders until 29 July 2008. You may therefore make a cap
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