Taxes Consolidation Act 1997 section 538

Disposals where assets lost or destroyed or become of negligible value

Section 538 provides for the capital gains tax treatment of assets that are completely lost, destroyed or have become worthless, including special rules for buildings and structures on land and for shares in dissolved companies.

• The complete loss, destruction or extinction of an asset is treated as a disposal for CGT purposes, even where no compensation is received, and may give rise to an allowable loss.
• Where the value of an asset has become negligible, the owner may claim to have it treated as sold and immediately reacquired at the value specified in the claim, crystallising a loss.
• A building or structure may be treated as a separate asset from the land on which it stands, but the site is deemed sold and reacquired at market value so that any increase in land value reduces the loss on the building.
• Where shares in a dissolved company give rise to a negligible value claim and the shareholder later acquires the company's property through a Ministerial waiver, the loss may not be set against gains in any year earlier than the year the property is disposed of.