What are E4 and G1 events?

CGT events E4 and G1 generally occur in the following circumstances: 

CGT event E4

  • A trust makes a payment in respect of a unit in the trust; and
  • Some or all of the payment is not included in your assessable income.

Typically, the trust will distribute tax deferred or return of capital amounts. 

Timing: A CGT event E4 will occur:

  • Just before the end of the income year in which the trustee makes the payment or
  • If another CGT event (except CGT event E4) happens in relation to the investors’ unit or part of it after the trust makes the payment but before the end of that income year— just before the time of that other CGT event.

CGT event G1

  • A company makes a payment in respect of a share in a company;
  • Some or all of the payment is not a dividend or a liquidator’s distribution taken to be a dividend; and
  • The payment is not included in the investor’s assessable income.

Typically, the amount is a return of capital in the hands of the investor. 
 
Payments from the trust or the company can be made in cash or in-specie (ie as a distribution of shares or other property).

Timing: A CGT event G1 will occur at the time the company makes the payment.

E4 and G1 capital gain and loss calculation

Where the non-assessable payments reduce the cost base to nil, any further distributions of such amounts will give rise to a capital gain. These capital gains are known as E4 or G1 capital gains. 
 
You cannot make a capital loss as a result of an E4 or G1 capital gain.
 

How an E4 or G1 capital gain is taxed

 Asset acquired CGT event E4 and G1 

Prior to 19 September 1985            

 

Capital gain disregarded

 

From 19 September 1985 and Prior to 11:45am 21 September 1999 

 

Net capital gain calculated using: 

  • indexed method (indexation frozen at Sept 1999) 
  • discount method (see below)

 

From 11.45am 21 September 1999

 

For assets held less than 12 months, the gain is calculated by deducting cost base from proceeds. 

For assets held longer than 12 months, any capital gain may be discounted by 50% (individuals) or 33.33% (complying super funds).

How we report E4 and G1 events

We report E4 and G1 gains resulting in the Tax Report – Detailed  in the Excess Assessable Gains section. We’ll also apply the appropriate CGT discount, if applicable, to any such gains. 

The Tax Report – Summary reports any CGT E4 or G1 capital gains in the Capital gains from trust distributions section as discounted, indexed or other capital gains, as appropriate.

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