Legal Definitions - capital return

Capital return refers to the repayment of cost or capital, which is not taxable as income. It is a revenue that represents the return of the initial investment.

• When an investor sells a stock for a higher price than they bought it for, the difference between the purchase price and the selling price is the capital return.
• A company may return capital to its shareholders by issuing a dividend or buying back its own shares.

These examples illustrate how capital return represents the repayment of the initial investment. When an investor sells a stock for a higher price than they bought it for, they are receiving a return on their initial investment. Similarly, when a company issues a dividend or buys back its own shares, it is returning capital to its shareholders.