I recently received a "return of capital" basically cash returned to me from a share I own . How is this dealt by capital gains tax or income tax?, my impression is that it is dealt with under capital gains tax.
Here are the figures I purchase 2000 shares of A for 1.10 euros in december 2016,
on march 31 2018 the shares are trading at 1.30 euros
on April 1 2018 the company returns capital to shareholders of 0.35euros a share
and at the close of trade on april 1 2018 the shares of A are trading at 1.08 euros.
Therefore my thinking is that the return of capital constitutes 24.5% of the total capitalisation of the shareholding
0.35/(0.35 + 1.08) = 0.245
so 24.5% 1.10 euros (the cost of buying the shares) is 0.27 euros
therefore the capital gain of the return of capital is 0.35 - 0.27 = 0.07euros per share
is this a correct approach?
Here are the figures I purchase 2000 shares of A for 1.10 euros in december 2016,
on march 31 2018 the shares are trading at 1.30 euros
on April 1 2018 the company returns capital to shareholders of 0.35euros a share
and at the close of trade on april 1 2018 the shares of A are trading at 1.08 euros.
Therefore my thinking is that the return of capital constitutes 24.5% of the total capitalisation of the shareholding
0.35/(0.35 + 1.08) = 0.245
so 24.5% 1.10 euros (the cost of buying the shares) is 0.27 euros
therefore the capital gain of the return of capital is 0.35 - 0.27 = 0.07euros per share
is this a correct approach?