Yep appears you pretty well have the scenario correct."A capital...

Yep appears you pretty well have the scenario correct.
"A capital reduction out of the share capital of a company, without a share cancellation, will result in CGT Event G1 (section 104-135 of the 1997 Act) applying to the shareholder. If the amount of the payment is not more than the cost base of the shares then the cost base and reduced cost base are reduced by that amount. If the amount of the payment is greater than the cost base then the excess will be a capital gain and the cost base is reduced to nil. A shareholder cannot make a capital loss under CGT Event G1. If the share was acquired 12 months or more before the payment then the shareholder may be entitled to apply the 50% CGT discount where the other conditions of that concession are met."
There are also implications if someone sells between record date and payment date.

And for those who want a read of a class ruling

ATO
CR 2019/70
Page status: legally binding Page 1 of 10
Class Ruling
Suncorp Group Limited – return of capital

That ruling also covered their share consolidation.

But I am only copy and pasting. Not my own advice