This information applies to you if you had a private health insurance policy with NIB on 20 March 2007 and received:
- shares, or
- a cash payment from the sale of shares (through participating in the Pre-Listing Share Sale Opportunity (share Sale Facility)
under the demutualisation of NIB which took place on 1 October 2007.
If you were not a resident of Australia when the demutualisation of NIB took place this information does not apply to you. You should seek independent advice or contact the Tax Office.
If you are an Eligible Policyholder and have verified your details with NIB, you will have been issued shares in NIB Holdings.
Eligible Policyholders also had the opportunity to sell their shares through a Sale Facility before NIB was listed on the Australian Securities Exchange (ASX). Eligible Policyholders who elected to sell their shares through the Sale Facility did not hold any shares when NIB listed on the ASX.
NIB was listed on the ASX on Monday 5 November 2007.
On 26 June 2008, the Government introduced a Bill into Parliament to change the law relating to the capital gains tax (CGT) treatment of policy holders of health insurers who receive cash or shares when their health insurer demutualises.
The proposed changes are contained in Tax Laws Amendment (2008 Measures No. 4) Bill 2008. This Bill will become law when passed by both Houses of Parliament and approved by the Governor General.
Under the proposed law, policy holders will disregard capital gains and losses that arise when a private health insurer demutualises. The new law will also provide rules for working out the CGT cost base (or reduced cost base) of your NIB shares and their time of acquisition for CGT purposes.
The changes to the law are proposed to take effect from 1 July 2007, and if enacted, will apply to the demutualisation of NIB.
Until the proposed new law is enacted, there is some uncertainty about what amount, if any, should be included in your tax return as a result of the demutualisation. In light of this uncertainty, the Tax Office will allow you to lodge your 2007-08 tax return without including any capital gain from the receipt of NIB shares at this stage.
The Tax Office will let you know what amount (if any) to include in your tax return and how to do this at a later time.
Frequently asked questions:
Yes. The proposed changes are intended to take effect from 1 July 2007, and if enacted, will apply to the demutualisation of NIB.
When the proposed changes become law there will be no immediate tax consequences for Eligible Policyholders from receiving shares under NIB’s demutualisation. This means that you will not have to show a capital gain in your 2007-08 tax return because you received NIB shares.
You may have sold your NIB shares on or before 30 June 2008 in one the following ways:
- by participating in the share Sale Facility
- by selling your shares on the Australian Securities Exchange (ASX)
If you sold your NIB shares through the share Sale Facility, NIB Holdings Ltd would have sent you the proceeds on 2 November 2007. The amount you received was 85 cents per share.
If you sold your shares on the ASX, the proceeds will be the amount you received.
Under the proposed changes, the first element of the cost base (or reduced cost base) of each of the shares issued will be equal to the share’s market value on the day of issue.
For assistance in working out your capital gain or loss, please refer to the Capital gains tax essentials on the Tax Office website for further information.
If you still hold your NIB shares as at 1 July 2008, you will not have made a capital gain or capital loss from the demutualisation. However, you will need to maintain records of your CGT cost base for the shares and their time of acquisition for CGT purposes.
Under the proposed changes, the first element of the cost base (or reduced cost base) of each of the shares issued will be equal to the share’s market value on the day of issue.
You acquired your shares for CGT purposes on 1 October 2007.
The Tax Office will continue to provide regular updates on the progress of the changes through Parliament, and how they will apply to you.
The Tax Office will work with NIB to provide you with information about the share’s market value on the day of issue.
For more information, please see:
Last Modified: Tuesday, 1 July 2008
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