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  • How do I work out the cost bases of the elements of the stapled securities that I received?

    Each Westfield stapled security is made up of:

    • one Westfield Holdings Limited (WSF) share
    • one Westfield Trust (WFT) unit, and
    • one Westfield America Trust (WFA) unit.

    For CGT purposes, each element of the stapled security is a separate CGT asset. The initial cost base (and reduced cost base) of each element is a reasonable part of the value of the Westfield Trust units exchanged for the stapled securities. The following table gives the initial cost base of each element (worked out based on the net tangible assets attached to each element):

    Element

    Initial cost base (reduced cost base)

    Calculation

    WSF share

    $1.41

    $15.48 x 9.09%

    WFT unit

    $8.11

    $15.48 x 52.39%

    WFA unit

    $5.96

    $15.48 x 38.52%

    Example - sale facility receiving stapled securities

    Albert acquired 1,000 units in WFT in June 2003. Immediately before the sale, the cost base of his units was $3,530 (or $3.53 per unit). Albert's units were consolidated as the first step of the sale arrangement. After consolidation, he held 280 (1,000 x 0.28) units with a cost base of $3,530 (or approximately $12.61 per unit).

    Albert chose to exchange his WFT units for Westfield Group stapled securities. He received 280 Westfield Group stapled securities in exchange for his WFT units. The Commissioner will accept that Albert's capital proceeds for the exchange of his units are equal to the volume weighted average price of the Westfield Group stapled securities over the first five trading days. Westfield has advised that this was $15.48.

    Calculating the net capital gain

    Albert makes a capital gain on the disposal of 280 units as follows:

    Capital proceeds (280 x $15.48)

    $4,334.40

    less total cost base

    $3,530.00

    Capital gain

    $804.40

    Because Albert had held his units for more than 12 months, he applies the CGT discount to his capital gain (if he had capital losses he would offset them against his capital gain before applying the discount). Albert will include a $402 ($804 x 50% to the nearest dollar) net capital gain on his tax return for the year ended 30 June 2005.

    Recording the capital gain on the tax return

    Assuming he had no other capital gains and no capital losses for the 2004-05 year, Albert would complete item 17 on his 2005 tax return (supplementary section) showing:

    • Did you have a capital gains tax event during the year? Yes
    • Net capital gain: $402
    • Total current year capital gains: $804
     

    Working out new cost bases

    Albert will calculate the cost base and reduced cost base of his WSF units, WFT and WFA units as follows:

    WSF units ($1.41 x 280) = $394.80

    WFT units ($8.11 x 280) = $2,270.80

    WFA units ($5.96 x 280) = $1,668.80

      Last modified: 06 Oct 2009QC 18185