CGT event G1 occurs where a shareholder holds QAN shares on the record date and continues to hold the shares on the return of capital payment date.
The capital return will reduce the cost base of QAN shares held on the record date (on a pre-consolidation basis) by $0.23 per QAN, but not below nil. This will increase any capital gain upon the subsequent disposal of the QAN shares (capital gain = Sale price – cost base).
QAN shareholders will make a capital gain where the return of capital amount exceeds the cost base of the QAN share. The capital gain is equal to the excess. No capital loss can be made from CGT event G1.
Any CGT event G1 capital gain can be reduced, provided that the shareholder has held the QAN share for over 12 months. For Australian residential individuals and trusts, they can obtain a discount of 50%, whilst superannuation funds can gain a 33.33% discount.
If the return of capital amount is less than the cost base of the QAN shares, a capital gain from CGT event G1 will not arise.