What this ruling covers
The Australian Taxation Office has issued Class Ruling CR 2026/40. The ruling covers the tax treatment of a return of capital payment made by FAR Ltd to its ordinary shareholders.
Details of the payment
- Amount: $0.35 per ordinary share
- Record date: 3 June 2026 (shareholders registered on the share register on this date)
- Payment date: 11 June 2026
Tax treatment confirmed by the ruling
The ruling confirms the $0.35 per share payment is not a dividend and does not form part of assessable income.
The payment triggers CGT event G1. Shareholders are required to reduce the cost base of their FAR shares by $0.35 per share. If the payment exceeds the cost base of a share, the difference is a capital gain.
CGT discount
Shareholders who held FAR shares for at least 12 months before 11 June 2026 may be eligible for the 50% CGT discount on any capital gain, under the conditions in Subdivision 115-A of the Income Tax Assessment Act 1997.
Foreign resident shareholders
Foreign resident shareholders generally disregard any capital gain from CGT event G1, unless their shares were used in carrying on a business through a permanent establishment in Australia.
Ruling period
The ruling applies for the period 1 July 2025 to 30 June 2026.
Key actions stated in the ruling
- If you held FAR Ltd shares on 3 June 2026 and received the $0.35 per share payment on 11 June 2026, check the cost base of each share to determine whether CGT event G1 produced a capital gain or simply a cost base reduction.
- If the $0.35 payment exceeded your cost base per share, report the excess as a capital gain in your 2025-26 tax return. If it did not exceed the cost base, reduce the cost base of each share by $0.35.
- If you held your FAR shares for at least 12 months before 11 June 2026, check whether the 50% CGT discount applies to any capital gain under the conditions in Subdivision 115-A of the Income Tax Assessment Act 1997.
- If you sold your FAR shares after 3 June 2026 but before 11 June 2026, a separate CGT event C2 applies to your right to receive the capital return - speak with your tax adviser about how to calculate the gain or loss in that circumstance.
- View the full ruling at https://www.ato.gov.au/law/view/document?docid=CLR/CR202640/NAT/ATO/00001 or consult your tax agent if you are unsure how these rules apply to your specific shareholding.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.