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  • Domain separation from Fairfax Media

    Fairfax Media (FXJ) separated Domain Holdings Australia Ltd (DHG) on 22 November 2017 under a scheme of arrangement. The record date for the scheme of arrangement is 7.00pm on 17 November 2017. FXJ shareholders will need to account for a capital gains tax event on 22 November 2017.

    A participating FXJ shareholder will receive one DHG share for every 10 FXJ shares they held at the scheme record date.

    Tax consequences of participating in the Domain separation

    • Don't include the value of the DHG shares as assessable income if you did not sell any FXJ shares after 17 November 2017 and before 22 November 2017.
    • If you sold your shares after 17 November 2017 and before 22 November 2017, you made a capital gain of $0.223 per FXJ share. You will be entitled to a discount if you owned your FXJ shares for 12 months or more.
    • The cost base of your DHG shares is calculated by multiplying the number of FXJ shares held on scheme record date by $0.233 and divided by the number of DHG shares you received
    • After the scheme implementation date, reduce the cost base of your FXJ shares by $0.223.
    • The date of acquisition of your DHG shares is 22 November 2017.

    Example

    Fred bought 12,000 FXJ shares in September 2011 for a total cost of $14,400 including brokerage.

    The cost of each FXJ shares is $1.20 (14,400 ÷ 12,000).

    He received 1,200 DHG shares (12,000 ÷ 10).

    The cost base of each FXJ shares is $0.98 (1.20 − 0.22).

    The cost base of each DHG share is $2.33 (0.233 × 12000 ÷ 1200)

    Fred sold 2,000 FXJ shares on 18 November 2017. Fred will receive 1,000 DHG

    shares.

    Fred made a capital gain of $446 calculated as follows:

    • capital reduction entitlement per FXJ share is $0.223
    • cost base of the right to entitlement is $0.00
    • capital gain per FXJ share is $0.223
    • capital gain is $446 (2000 × 0.223).
    End of example

    See also:

      Last modified: 25 Oct 2018QC 57220