• Event summaries

    Alamain Investments Limited (declaration that shares are worthless)

    What happened

    • Alamain Investments Limited (Alamain) was suspended from trading on the ASX on 1 March 2004; a liquidator was appointed in May of that year
       
    • On 4 August 2005, the liquidator for Alamain announced that there is no likelihood that shareholders in the company will receive any further distribution for their shares

    Tax implications

    For capital gains tax (CGT) purposes:

    • You may claim a capital loss on your Alamain shares in the 2005-06 income year.
       
    • The amount of the capital loss that you can claim is the reduced cost base of your Alamain shares on 4 August 2005.

    Note: A capital loss is not available for certain shares acquired under an employee share scheme. Shareholders who have acquired shares in this way should seek their own tax advice.

    Where to find more information

    Shares and other securities that become worthless

    AMP Limited (return of capital)

    What happened

    • AMP Limited (AMP) made a capital return of 40 cents per share in June 2006
       
    • The record date for entitlement to the capital return was 25 May 2006
       
    • The payment date for the capital return was 19 June 2006

    Capital gains tax (CGT) implications

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

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.40 per share on the return of capital.
       
    • If you acquired the shares on or before 18 June 2005, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    Read AMP Limited (AMP): 2006 return of capital.

    See Class Ruling CR 2006/25 (Withdrawn). Income tax: AMP Limited - proposed return of capital to shareholders.

    Note that class rulings on events are automatically withdrawn at the end of the income year the event took place in. However, these rulings continue to apply to participants in these events after they are officially withdrawn.

    Aristocrat Leisure Limited (return of capital)

    What happened

    • Aristocrat Leisure Limited (Aristocrat) made a capital return of 21 cents per share in July 2005
       
    • The record date for entitlement to the capital return was 1 July 2005
       
    • The payment date for the capital return was 15 July 2005

    Capital gains tax (CGT) implications

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

    • For each share that had a cost base equal to or more than $0.21, you must reduce the cost base and reduced cost base by $0.21, but not below nil.
       
    • For each share that had a cost base of less than $0.21
       
      • you made a capital gain equal to the difference between the cost base and $0.21 ($0.21 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

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

    • The return of capital is a capital gains tax (CGT) event that is separate from the disposal of your shares.
       
    • You made a capital gain of $0.21 per share on the return of capital.
       
    • If you acquired the shares before 15 July 2004, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    Aristocrat Leisure Limited (Aristocrat): 2005 return of capital

    Class Ruling CR 2005/51 (Withdrawn): Income tax: return of capital: Aristocrat Leisure Limited

    Avatar Industries Limited (return of capital)

    What happened

    • Avatar Industries Limited (Avatar) made a capital return of 5 cents per share in May 2006
       
    • The record date for entitlement to the capital return was 10 May 2006
       
    • The payment date for the capital return was 17 May 2006

    Capital gains tax (CGT) implications

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

    • For each share that had a cost base equal to or more than $0.05, you must reduce the cost base and reduced cost base by $0.05, but not below nil.
       
    • For each share that had a cost base of less than $0.05:
       
      • you made a capital gain equal to the difference between the cost base and $0.05 ($0.05 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.05 per share on the return of capital.
       
    • If you acquired the shares before 17 May 2005, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    See Class Ruling CR 2006/39 (Withdrawn) - Income tax: Avatar Industries Limited: proposed return of capital.

    Baycorp Advantage Limited (return of capital)

    What happened

    • Baycorp Advantage Limited (Baycorp) made a capital return of 50 cents per share in November 2005
       
    • The record date for entitlement to the capital return was 3 November 2005
       
    • The payment date for the capital return was 17 November 2005

    Capital gains tax (CGT) implications

    For shares that you 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, you must reduce the cost base and reduced cost base by $0.50, but not below nil.
       
    • For each share that had a cost base of less than $0.50
       
      • you made a capital gain equal to the difference between the cost base and $0.50 ($0.50 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.50 per share on the return of capital.
       
    • If you acquired the shares before 17 November 2004, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    See Class Ruling CR 2005/86 (Withdrawn), Income tax: Baycorp Advantage: return of capital and on-market share buy-back.

    BHP Billiton (share buy-back)

    What happened

    • On 3 April 2006, BHP Billiton (BHP) completed an off-market share buy-back
       
    • You received $23.45 for each BHP share bought back from you, made up of
       
      • a fully franked dividend of $21.35, and
         
      • capital proceeds of $2.10*
       

    * the ATO has determined that, for capital gains tax purposes, you are deemed to have received capital proceeds of $5.96 per share.

    Tax implications

    For income tax purposes:

    • You must include the dividend in your assessable income for the year ended 30 June 2006. Also include the franking credit if you are entitled to claim it.

    For capital gains tax (CGT) purposes:

    • You made a capital gain on each share for which you had a cost base of less than $5.96.
       
    • You made a capital loss on each share for which you had a reduced cost base greater than $5.96.
       
    • The disposal date of your shares was 3 April 2006.

    Where to find more information

    Read: BHP Billiton: 2006 off-market share buy-back

    See: Class Ruling CR 2006/33 (Withdrawn) Income tax: share buy-back: BHP Billiton Limited.

    Central Equity Limited (2005 share buy-back)

    What happened

    • In August 2005 Central Equity Limited (Central Equity) completed an off-market share buy-back
       
    • You received $2.00 for each Central Equity share bought back from you, made up of
       
      • a fully franked dividend of $1.50, and
         
      • capital proceeds of $0.50*
       

    * the ATO has determined that, for capital gains tax purposes, you are deemed to have received capital proceeds of $0.68 per share.

    Tax implications

    For income tax purposes:

    • You must include the dividend in your assessable income for the year ended 30 June 2006. Also include the franking credit if you are entitled to claim it.

    For capital gains tax (CGT) purposes:

    • You made a capital gain on each share for which you had a cost base of less than $0.68.
       
    • You made a capital loss on each share for which you had a reduced cost base greater than $0.68.
       
    • The disposal date of your shares was 15 August 2005.

    Where to find more information

    See: Class Ruling CR 2005/87 (Withdrawn), Income tax: off-market share buy-back: Central Equity Limited.

    CSR Limited (return of capital)

    What happened

    • CSR Limited (CSR) made a capital return of 20 cents per share in August 2005
       
    • The record date for entitlement to the capital return was 21 July 2005
       
    • The payment date for the capital return was 4 August 2005

    Capital gains tax (CGT) implications

    For shares that you 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, you must reduce the cost base and reduced cost base by $0.20, but not below nil.
       
    • For each share that had a cost base of less than $0.20
       
      • you made a capital gain equal to the difference between the cost base and $0.20 ($0.20 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.20 per share on the return of capital.
       
    • If you acquired the shares before 4 August 2004, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    Read CSR Limited (CSR): 2005 return of capital

    See Class Ruling CR 2005/45 (Withdrawn): Income tax: capital reduction: CSR

    Farnell & Thomas Limited (declaration that shares are worthless)

    What happened

    • Farnell & Thomas Limited (Farnell & Thomas) was suspended from trading on the Australian Stock Exchange and put into administration on 11 July 2000
       
    • On 25 August 2005, the liquidator for Farnell & Thomas announced that there is no likelihood that shareholders in the company will receive any further distribution for their shares

    Tax implications

    For capital gains tax (CGT) purposes:

    • You may claim a capital loss on your Farnell & Thomas shares in the 2005-06 income year.
       
    • The amount of the capital loss that you can claim is the reduced cost base of your Farnell & Thomas shares on 25 August 2005.

    Where to find more information

    Read Shares and other securities that become worthless.

    Federation Group Limited (declaration that shares are worthless)

    What happened

    • Federation Group Limited (Federation Group) was put into administration in October 2003
       
    • On 1 July 2005, the liquidator for Federation Group announced that there is no likelihood that shareholders in the company will receive any further distribution for their shares

    Tax implications

    For capital gains tax (CGT) purposes:

    • You may claim a capital loss on your Federation Group shares in the 2005-06 income year.
       
    • The amount of the capital loss that you can claim is the reduced cost base of your Federation Group shares on 1 July 2005.

    Where to find more information

    Read Shares and other securities that become worthless.

    Henry Walker Eltin Group Limited (declaration that shares are worthless)

    What happened

    • Henry Walker Eltin Group Limited (Henry Walker Eltin) was suspended from trading on the Australian Stock Exchange and put into administration on 31 January 2005
       
    • On 3 March 2006, the administrator for Henry Walker Eltin announced that there is no likelihood that shareholders in the company will receive any further distribution for their shares

    Tax implications

    For capital gains tax (CGT) purposes:

    • You may claim a capital loss on your Henry Walker Eltin shares in the 2005-06 income year.
       
    • The amount of the capital loss that you can claim is the reduced cost base of your Henry Walker Eltin shares on 3 March 2006.

    Note that a capital loss is not available for certain shares acquired under an employee share scheme. Shareholders who have acquired shares in this way should seek their own tax advice.

    Where to find more information

    Read Shares and other securities that become worthless.

    Keycorp Limited (return of capital)

    What happened

    • Keycorp Limited (Keycorp) made a capital return of 41 cents per share in September 2005
       
    • The record date for entitlement to the capital return was 5 September 2005
       
    • The payment date for the capital return was 12 September 2005

    Capital gains tax (CGT) implications

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

    • For each share that had a cost base equal to or more than $0.41, you must reduce the cost base and reduced cost base by $0.41, but not below nil.
       
    • For each share that had a cost base of less than $0.41
       
      • you made a capital gain equal to the difference between the cost base and $0.41 ($0.41 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.41 per share on the return of capital.
       
    • If you acquired the shares before 12 September 2004, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    See Class Ruling CR 2005/71 (Withdrawn), Income tax: Keycorp Limited - proposed return of capital.

    Mayne Group Limited (demerger)

    What happened

    • On 30 November 2005, Mayne Group Limited de-merged its interest in Mayne Pharma Limited. Following the demerger, Mayne Group Limited was renamed Symbion Health Limited
       
    • Under the demerger, you received a return of capital of $2.49 for each Mayne Group share you held
       
    • The capital return was compulsorily used to purchase the Mayne Pharma shares
       
    • You received one Mayne Pharma Limited share for every Mayne Group share you held

    Tax implications

    For income tax purposes:

    • You do not include the return of capital in your assessable income.
       
    • Demerger rollover relief is available.

    For capital gains tax (CGT) purposes:

    • The CGT status of your new Mayne Pharma shares will depend on when you acquired the original Mayne Group shares and on whether you choose rollover relief.
       
    • You may be required to include a capital gain or loss from this demerger in your tax return for 2005-06 if you do not choose rollover relief.
       
    • You must adjust the cost base and reduced cost base of your shares whether or not you chose rollover relief.

    Adjusting your cost base

    Take the cost base of your post-CGT Mayne Group shares just before the demerger (not including indexation) and spread the amount across both your Mayne Group (Symbion Health) and Mayne Pharma shares. Do this in the following proportions:

    • Mayne Group (Symbion Health) Limited = 55.783% of total.
       
    • Mayne Pharma Limited = 44.217% of total.

    If you do not choose rollover, the cost base of the Mayne Pharma shares received that relate to pre-CGT Mayne Group shares is $2.49 per share.

    Where to find more information

    Read: Demergers: 2005 Mayne Group Ltd (renamed Symbion Health Ltd) demerger

    See: Class Ruling CR 2005/83 (Withdrawn) Income tax: demerger of Mayne Pharma Limited by Mayne Group Limited.

    Visit the Symbion Health website.

    New Hope Limited (return of capital)

    What happened

    • New Hope Limited (New Hope) made a capital return of 10 cents per share in December 2005
       
    • The record date for entitlement to the capital return was 2 December 2005
       
    • The payment date for the capital return was 16 December 2005

    Capital gains tax (CGT) implications

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

    • For each share that had a cost base equal to or more than $0.10, you must reduce the cost base and reduced cost base by $0.10, but not below nil.
       
    • For each share that had a cost base of less than $0.10
       
      • you made a capital gain equal to the difference between the cost base and $0.10 ($0.10 minus the cost base), and
         
      • you must reduce the cost base and reduced cost base of each share to nil.
       

    For shares that you 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 your shares.
       
    • You made a capital gain of $0.10 per share on the return of capital.
       
    • If you acquired the shares before 16 December 2004, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    See Class Ruling CR 2005/96 (Withdrawn) Income tax: return of capital: New Hope Corporation Limited.

    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 7.00 pm (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 2006/60 (Withdrawn): 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 (return of capital)

    What happened

    • Promina Group Limited (Promina) made a capital return of 15 cents per share in June 2006
       
    • The record date for entitlement to the capital return was 1 June 2006
       
    • The payment date for the capital return was 16 June 2006

    Capital gains tax (CGT) implications

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

    • For each share that had a cost base equal to or more than $0.15, you must reduce the cost base and reduced cost base by $0.15.
       
    • For each share that had a cost base of less than $0.15
      • you made a capital gain equal to the difference between the cost base and $0.15 ($0.15 minus the cost base)
         
      • you must reduce the cost base and reduced cost base of each share to nil.
         
       

    For shares that you 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 your shares
       
    • you made a capital gain of $0.15 per share on the return of capital
       
    • if you acquired the shares on or before 15 June 2005, you may qualify for a discount capital gain on the return of capital.

    Where to find more information

    See Class Ruling CR 2006/45 (Withdrawn): Promina Limited - proposed 2006 return of capital.

    Note
    Class rulings on events are automatically withdrawn at the end of the income year that the event took place in. However, these rulings continue to apply to participants in these events after they are officially withdrawn.

    Phone us on 13 28 61.

    St George Bank Ltd (share buy-back)

    What happened

    • On 21 February 2006 St George Bank Ltd (St George) completed an off-market share buy-back
       
    • You received $25.69 for each St George share bought back from you, made up of
       
      • a fully franked dividend of $19.15, and
         
      • capital proceeds of $6.54*
       

    *the ATO has determined that, for capital gains tax purposes, you are deemed to have received capital proceeds of $10.59 per share.

    Tax implications

    For income tax purposes:

    • You must include the dividend in your assessable income for the year ended 30 June 2006. Also include the franking credit if you are entitled to claim it.

    For capital gains tax (CGT) purposes:

    • You made a capital gain on each share for which you had a cost base of less than $10.59.
       
    • You made a capital loss on each share for which you had a reduced cost base greater than $10.59.
       
    • The disposal date of your shares was 21 February 2006.

    Where to find more information

    Read: St George Bank: 2006 off-market share buy-back

    See: Class Ruling CR 2006/23 (Withdrawn): Income tax: off-market share buy-back: St George Limited.

    Westpoint Group (corporate collapse)

    What happened

    • Some entities in the Westpoint group issued promissory notes to investors
       
    • Many of these entities were placed in administration or receivership in February and March 2006
       
    • It is expected that these entities will be wound up and you will make a loss

    Tax implications

    For income tax purposes:

    • You include only interest payments that were actually paid on the notes in your assessable income for 2005-06.
       
    • You may claim a deduction for interest you incurred on funds borrowed to acquire the promissory notes.
       
    • You cannot claim a deduction for the loss on your investment in the promissory notes.

    For capital gains tax (CGT) purposes:

    • It is unlikely that a capital loss will be available on the promissory notes in the 2005-06 income year.

    Where to find more information

    Read Westpoint promissory notes - tax deductions and capital losses for 2005-06

    Read Shares and other securities that become worthless

    See Taxation Ruling TR 2004/4 - Deductions for interest incurred prior to the commencement of, or following the cessation of, relevant income earning activities.

    Westpac Banking Corporation (share buy-back)

    What happened

    • In December 2005 Westpac Banking Corporation (Westpac) completed an off-market share buy-back
       
    • You received $19.13 for each Westpac share bought back from you, made up of
       
      • a fully franked dividend of $15.13, and
      • capital proceeds of $4.00*
       

    * the ATO has determined that, for capital gains tax purposes, you are deemed to have received capital proceeds of $5.18 per share.

    Tax implications

    For income tax purposes:

    • You must include the dividend in your assessable income for the year ended 30 June 2006. Also include the franking credit if you are entitled to claim it.

    For capital gains tax (CGT) purposes:

    • You made a capital gain on each share for which you had a cost base of less than $5.18.
       
    • You made a capital loss on each share for which you had a reduced cost base greater than $5.18.
       
    • The disposal date of your shares was 19 December 2005.

    Where to find more information

    Read: Westpac: 2005 off-market share buy-back

    See: Class Ruling CR 2006/6 (Withdrawn): Income tax: share buy-back: Westpac Banking Corporation.

      Last modified: 10 Nov 2006QC 18793