• ## Section 2: Capital gain or capital loss

In this section you work out whether you had a capital gain or capital loss as a result of receiving OneSteel shares under the merger.

You need to work this out because if you had a:

• capital gain - you will need to include it when working out your net capital gain or capital loss for your 2007-08 income tax return unless you can choose rollover to defer the capital gain.
• capital loss - you will need to include it when working out your net capital gain or net capital loss for your 2007-08 income tax return.
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### Column 5: Value of OneSteel shares received

You need to know the value of the OneSteel shares you received because you use it to work out the capital gain or capital loss you made.

Working out the value of your OneSteel shares is a two-step process: first you need to work out how many OneSteel shares you received for each parcel of Smorgon shares, then work out what they are worth.

For every Smorgon share you received 0.4091 of a OneSteel share. The Tax Office accepts that the value of one OneSteel share on the day of the merger was \$5.8531.

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#### Step 1: Number of OneSteel shares received

Work out how many OneSteel shares you received for each of your Smorgon share parcels:

column 3 (Number of Smorgon shares in parcel) x 0.4091

Keep these figures and use them when you are filling in column 10.

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#### Step 2: Value of OneSteel shares

Work out the value of the parcel:

Result from Step 1 (Number of OneSteel shares in the parcel) x \$5.8531

Enter the answer in column 5.

Do this for each parcel of shares.

### Column 6: Capital gain or capital loss amount

#### Step 1: Capital gain

To work out if you have made a capital gain on the OneSteel shares you received, take the cost base of your Smorgon shares (column 4) from the value of the OneSteel shares (column 5). So for each parcel, work out:

column 5 (value of OneSteel shares) - column 4 (cost base)

If the result is:

positive, you have made a capital gain - enter the result in column 6 and go to column 7.

• zero or negative, you need to work out whether you have made a capital loss - go to step 2.

#### Step 2: Capital loss

To work out whether you have a capital loss, take the reduced cost base of your Smorgon shares from the value of your OneSteel shares. For each parcel, work out:

column 5 (value of OneSteel shares) - reduced cost base

If the result is:

• negative, you have made a capital loss - you must include the capital loss amount when calculating your net capital gain or net capital loss for your 2007-08 tax return.
• zero or positive, you have neither a capital loss nor a capital gain.

Go to section 3.

### Column 7: Scrip-for-scrip rollover

You can choose scrip-for-scrip rollover for your capital gain. To do this:

• print 'Y' in column 7, and
• go to section 3 (you do not need to complete column 8).

Most Smorgon shareholders will be able to, and will want to, choose scrip-for-scrip rollover.

If you do not choose scrip-for-scrip rollover, print 'N' in column 7 and go to column 8.

### Column 8: CGT discount

If you made a capital gain from the OneSteel shares received, you are eligible to treat any resulting capital gain as a discounted capital gain provided you:

• were an individual, a complying superannuation entity or an eligible trust at the time of the merger
• worked out the capital gain using a cost base that had been worked out without reference to indexation at any time, and
• had held your Smorgon shares for at least 12 months before the date of disposal.

Date of disposal is taken to be 20 August 2007 (the acquisition date for general CGT purposes).

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For each parcel, print 'Y' in column 8 if you are eligible and 'N' if you are not eligible for the CGT discount.

You must include this capital gain when calculating your net capital gain or net capital loss for your 2007-08 income tax return.

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