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  • AMP Limited (return of capital)

    What happened

    • AMP made a capital return of $0.40 per share on 18 June 2007 (the payment date)
    • The record date for entitlement to the capital return was 25 May 2007

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.40, investors reduce the cost base and reduced cost base by $0.40.
    • For each share that had a cost base of less than $0.40
      • investors made a capital gain equal to the difference between the cost base and $0.40 ($0.40 minus the cost base)
      • investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.40 per share on the return of capital.

    If investors acquired the shares on or before 17 June 2006, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 18 June 2007.

    Where to find more information

    See Class Ruling CR 2007/30: Income tax: proposed return of capital: AMP Limited.

    Ausron Limited (return of capital)

    What happened

    • Ausron Limited (Ausron) made a capital return of 3 cents per share on 6 November 2006 (the payment date)
    • The record date for entitlement to the capital return was 30 October 2006

    Note that Ausron also made a fully franked dividend payment of 0.25 cents per share on 6 November 2006. This dividend is not part of the capital return and is to be returned as income in the usual way.

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.03, investors reduce the cost base and reduced cost base by $0.03.
    • For each share that had a cost base of less than $0.03
      • investors made a capital gain equal to the difference between the cost base and $0.03 ($0.03 minus the cost base)
      • investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.03 per share on the return of capital
    • if investors acquired the shares on or before 5 November 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 6 November 2006.

    Where to find more information

    See Class Ruling CR 2006/106W: Return of capital: Ausron Limited.

    Austar United Communications Limited (return of capital)

    What happened

    • Austar United Communications Limited (Austar) made a capital return of $0.16 per share on 20 September 2006 (the payment date)
    • The record date for entitlement to the capital return was 6 September 2006

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.16, investors reduce the cost base and reduced cost base by $0.16.
    • For each share that had a cost base of less than $0.16
      • investors made a capital gain equal to the difference between the cost base and $0.16 ($0.16 minus the cost base)
      • Investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.16 per share on the return of capital
    • if investors acquired the shares on or before 19 September 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 20 September 2006.

    Where to find more information

    See Class Ruling CR 2006/80W: Income tax: proposed return of capital: Austar United Communications Limited.

    Australian Stock Exchange Limited (return of capital)

    What happened

    • Australian Stock Exchange Limited (ASX) made a capital return of $0.585 per share on 24 October 2006 (the payment date)
    • The record date for entitlement to the capital return was 17 October 2006

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.585, investors reduce the cost base and reduced cost base by $0.585.
    • For each share that had a cost base of less than $0.585
      • investors made a capital gain equal to the difference between the cost base and $0.585 ($0.585 minus the cost base)
      • Investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.585 per share on the return of capital
    • if investors acquired the shares on or before 23 October 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 24 October 2006.

    Where to find more information

    See Class Ruling CR 2006/86W: Income tax: Australian Stock Exchange Limited - proposed return of capital.

    Baycorp Advantage Limited (return of capital)

    What happened

    • Baycorp Advantage Limited (Baycorp) made a capital return of 35 cents per share on 17 November 2006 (the payment date)
    • The record date for entitlement to the capital return was 2 November 2006

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.35, investors reduce the cost base and reduced cost base by $0.35.
    • For each share that had a cost base of less than $0.35
      • investors made a capital gain equal to the difference between the cost base and $0.35 ($0.35 minus the cost base)
      • investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.35 per share on the return of capital
    • if investors acquired the shares on or before 16 November 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 17 November 2006.

    Where to find more information

    See Class Ruling CR 2006/105W:Baycorp Advantage Limited: return of capital.

    Brambles Industries Limited (scheme of arrangement)

    What happened

    • In December 2006 Brambles Industries Limited (BIL) entered a scheme of arrangement under which BIL shareholders received one share in Brambles Limited (Brambles) in exchange for every share that they held in BIL
    • Shareholders could offer part or all of their BIL shares for exchange for cash instead of shares
    • The record date for participation in the scheme of arrangements was 16 November 2006

    The implementation date of the scheme was 4 December 2006.

    Capital gains tax implications

    • Scrip-for-scrip rollover is available where shares in BIL were exchanged for shares in Brambles
    • Rollover relief is not available for the BIL shares exchanged for cash

    Capital gain/loss calculation

    • If you choose rollover you make no capital gain or loss on the disposal of your shares in BIL
    • If rollover does not apply you work out your capital gain or loss by comparing the total cost base of your BIL shares with the total value (as at the disposal date) of the cash and/or shares that you received

    Acquisition cost of new Brambles Limited shares calculation

    • If you choose rollover the acquisition cost of your new shares equals the cost base of your BIL shares on the disposal date.
    • If rollover does not apply the acquisition cost of your new Brambles shares equals the value of the BIL shares that you exchanged for them on the disposal date.

    Disposal date

    The disposal date of the BIL shares was 4 December 2006.

    Where to find more information

    See: Class Ruling CR 2006/92W: Income tax: scrip for scrip rollover: acquisition of Brambles Industries Limited by Brambles Limited.

    Henderson Group PLC (return of capital and share cancellation)

    What happened

    • On 13 October 2006 Henderson cancelled 22 shares out of every 100 held on the Record Date
    • For each share held on the London Stock Exchange that was cancelled shareholders received 78 pence
    • For each share held on the Australian Stock Exchange (CDI holders) that was cancelled CDI holders received $1.931787*

    *Previously, in working out your capital gain or capital loss under the law, you were required to use the market value of the shares immediately prior to the cancellation as the capital proceeds. This was $2.38.

    The law has been amended with effect from 1 July 2006. As a result, if your shares were cancelled under the Henderson 2006 return of capital you use the amount you actually received as your capital proceeds.

    For more information, see Class Ruling CR 2006/123A1 - Addendum Income tax: Henderson Group plc return of capital.

    If you require an amendment to your 2006-07 tax return to take into account this change in law, you should request an amendment.

    Tax agent prepared amendment requests

    Tax agent prepared amendment requests can be lodged via the electronic lodgment service (ELS). If you use a tax agent, your tax agent can give you more information on how this may affect you.

    Self-prepared amendment request

    If you are requesting an amendment request on your own behalf you should complete the Request for amendment of income tax return for individuals or write your own letter and post it to:

    Australian Taxation Office
    PO Box 5056
    SYDNEY NSW 2001

    If you are writing a letter, provide your name, address, phone number, tax file number and information about what you want to amend. Include:

    • a heading to the letter titled 'CGT - changes to market value amendment'
    • the year of the tax return you want to amend - 2007
    • the label you want amended - for example 'total current year capital gains', 'net capital losses carried forward to later income years' or 'net capital gain' and the amount of the adjustment
    • a declaration as follows: 'I declare that all the information I have given in this letter, including any attachments, is true and correct'
    • the date
    • your signature.

    Capital gains tax implications

    For capital gains tax purposes:

    • Investors made a capital gain on each share for which they had a cost base of less than $1.931787.
    • Investors made a capital loss on each share for which they had a reduced cost base greater than $1.931787.

    The disposal date of their shares was 13 October 2006.

    Where to find more information

    See Class Ruling CR 2006/123W: Income tax: Henderson Group plc return of capital and Class Ruling CR 2006/123A1- Addendum Income Tax: Henderson Group plc - return of capital.

    Hostworks Group Limited (return of capital)

    What happened

    • Hostworks Group Limited (Hostworks) made a capital return of 1 cent per share on 15 November 2006 (the payment date)
    • The record date for entitlement to the capital return was 1 November 2006

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.01, investors reduce the cost base and reduced cost base by $0.01.
    • For each share that had a cost base of less than $0.01
      • investors made a capital gain equal to the difference between the cost base and $0.01 ($0.01 minus the cost base)
      • Investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.01 per share on the return of capital
    • if investors acquired the shares on or before 14 November 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 15 November 2006.

    Where to find more information

    See Class Ruling CR 2006/107W: Income tax: proposed return of capital by Hostworks Group Ltd.

    Miller's Retail Limited (renamed Specialty Fashion Group Limited) (return of capital and share reduction)

    What happened

    • Miller's Retail Limited made a capital return of $0.20 per share on 10 November 2006 (the payment date)
    • The record date for entitlement to the capital return was 2 November 2006

    In a separate transaction, Miller's also reduced the number of shares on issue by way of a 10 for 8 consolidation.

    Capital gains tax implications

    Capital return:

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.20, investors reduce the cost base and reduced cost base by $0.20.
    • For each share that had a cost base of less than $0.20
      • investors made a capital gain equal to the difference between the cost base and $0.20 ($0.20 minus the cost base)
      • investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.20 per share on the return of capital
    • if investors acquired the shares on or before 9 November 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 10 November 2006.

    Share consolidation:

    The consolidation does not trigger a CGT event.

    Following consolidation, the total cost base of the shares held just before consolidation is spread across the shares now held.

    Where to find more information

    See Class Ruling CR 2006/90W: Income tax: Miller's Retail Limited - proposed return of capital and share consolidation.

    Patrick Corporation (takeover by Toll)

    What happened

    • Between 29 September 2005 and 25 May 2006, Toll Limited (Toll) made a takeover offer for Patrick Corporation (Patrick)
    • Patrick shareholders who accepted the offer received $3.00 cash plus 0.4 Toll shares for each Patrick share
    • Patrick shareholders who did not accept the offer before 7.00pm (Melbourne time) on 25 May 2006 had their shares compulsorily acquired on 1 July 2006. They received the same consideration as accepting shareholders

    Tax implications

    For capital gains tax (CGT) purposes:

    Rollover relief

    • Partial scrip-for-scrip rollover is available.
    • Rollover relief is not available for the cash amounts received.

    Capital gain/loss calculation

    • If you choose rollover, you work out your capital gain (no loss allowed) by subtracting a pro-rata portion of the cost base of your Patrick shares from the value of cash that you received.
    • If rollover does not apply, you work out your capital gain or loss by comparing the total cost base of your Patrick shares with the total value (as at the disposal date) of the cash and shares that you received.

    Acquisition cost of new Toll shares calculation

    • If you choose rollover, you work out the acquisition cost of your new Toll shares by allocating the remaining portion (not used to work out the capital gain) of the cost base of your Patrick shares to it.
    • If rollover does not apply, you work out the acquisition cost of your new Toll shares by subtracting the amount of the cash that you received from the total value of your Patrick shares on the disposal date.

    Disposal date

    The disposal date of the shares was:

    • if you accepted the offer between 29 September 2005 and 7.00pm Melbourne time 25 May 2006 - the date you accepted the offer
    • if you did not accept the offer by 7.00pm Melbourne time 25 May 2006 - the date that your shares were compulsorily acquired.

    Where to find more information

    • See Class Ruling 2006/60W: Income tax: scrip for scrip rollover: acquisition of Patrick Corporation Limited shares by Toll Holdings Limited
    • Phone us on 13 28 61

    Promina Group Limited (merger with Suncorp-Metway Limited)

    What happened

    • On 21 October 2006, Suncorp-Metway Limited (Suncorp) entered a scheme of arrangement with Promina Group Limited (Promina) which gave Suncorp control of all of the shares in Promina
    • Promina shareholders received 0.2703 Suncorp shares plus $1.80 in exchange for each of their Promina shares
    • The implementation date of the scheme of arrangement was 20 March 2007
    • The one day volume weighted average price of Suncorp shares on 20 March 2007 was $21.1043 and is acceptable as the market value

    Tax implications

    For capital gains tax purposes:

    Rollover relief

    • Scrip-for-scrip rollover is available to the extent that Promina shareholders exchanged their shares for Suncorp shares.
    • Rollover relief is not available for the cash amounts received.

    Capital gain/loss calculation

    • If investors choose rollover they work out their capital gain (if they received any cash) by subtracting a portion of the cost base of their Promina shares from the value of cash that they received.
    • If rollover does not apply investors work out their capital gain or loss by comparing the total cost base of their Promina shares with the total value (as at the disposal date) of the cash and/or shares that they received.

    Acquisition cost of new Suncorp shares calculation

    • To the extent that investors choose rollover they work out the acquisition cost of their new Suncorp shares by allocating a portion of the cost base of their Promina shares to it.
    • To the extent that rollover does not apply the acquisition cost of investors' new Suncorp shares is $20.4218 per share.

    Disposal date

    The disposal date of the Promina shares was 20 March 2007.

    Where to find more information

    See Class Ruling 2007/25: Income tax: scrip for scrip rollover: acquisition Promina Group Limited shares by Suncorp Metway Limited.

    Rinker Group Limited (return of capital)

    What happened

    Rinker Group Limited (Rinker) made a capital return of 50 cents per share on 17 August 2006 (the payment date).

    The record date for entitlement to the capital return was 25 July 2006.

    Note that Rinker made two dividend payments on 4 July 2006:

    • a final dividend of $0.24 per share, this dividend was franked to 60%
    • a special dividend of $0.40 per share, this dividend was unfranked.

    These dividends are not part of the capital return and are to be returned as income in the usual way.

    Capital gains tax implications

    For shares that investors owned at record date and still owned at payment date:

    • For each share that had a cost base equal to or more than $0.50, investors reduce the cost base and reduced cost base by $0.50.
    • For each share that had a cost base of less than $0.50
      • investors made a capital gain equal to the difference between the cost base and $0.50 ($0.50 minus the cost base)
      • investors also reduce the cost base and reduced cost base of each share to nil.
       

    For shares that investors owned at record date but no longer owned at payment date:

    • the return of capital is a CGT event that is separate from the disposal of their shares
    • investors made a capital gain of $0.50 per share on the return of capital
    • if investors acquired the shares on or before 16 August 2005, they may qualify for a discount capital gain on the return of capital.

    For all shareholders, the date of the event was 17 August 2006.

    Where to find more information

    See Class Ruling CR 2006/49W: Return of capital: Rinker Group Limited.

      Last modified: 20 Jul 2017QC 19499