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  • Westfield Group – takeover by Unibail-Rodamco SE (2018)

    This document contains tax information for Westfield Group stapled security holders who:

    • received OneMarket Limited (OneMarket) shares on 7 June 2018
    • exchanged their Westfield Group stapled securities for cash and Unibail-Rodamco SE stapled securities on 7 June 2018.

    Westfield Group stapled security holders can also use the Westfield Group – 2018 calculator to work out their tax outcomes from the takeover by Unibail-Rodamco SE on 7 June 2018.

    Find out about:

    Does this apply to you?

    This information applies to you, and will be important when preparing your 2018 income tax return, if you:

    • are an Australian resident for tax purposes
    • acquired OneMarket shares on 7 June 2018
    • exchanged your Westfield Group stapled securities on 7 June 2018 for cash and Unibail-Rodamco SE stapled securities
    • did not acquire your Westfield Group stapled securities under an employee share scheme
    • do not choose to use an applicable functional currency under Subdivision 960-D of the Income Tax Assessment Act 1997
    • held your stapled securities as an investment asset (that is, made a capital gain or capital loss as a result of the exchange of your stapled securities), not as    
      • trading stock
      • part of carrying on a business
      • revenue assets.
       

    Background

    What is a Westfield Group stapled security?

    Before these transactions, a Westfield Group stapled security traded on the Australian Securities Exchange (ASX) as a single security, consisting of:

    • one share in Westfield Corporation Ltd (WCL)
    • one unit in WFD Trust (WFDT), and
    • one unit in Westfield America Trust (WAT).

    What is a Unibail-Rodamco SE stapled security?

    A Unibail-Rodamco SE stapled security consists of:

    • one share in Unibail-Rodamco SE, and
    • one share in Newco BI.

    This stapled security trades on the Euronext Paris exchange and the Euronext Amsterdam exchange.

    It also trades on the ASX in the form of CHESS Depositary Interests (CDIs) – where 20 CDIs represent one Unibail-Rodamco SE stapled security.

    First transaction – receipt of OneMarket shares

    WCL transferred all its shares in OneMarket to its shareholders (that is, to the Westfield Group stapled security holders). This happened on 7 June 2018, just before the exchange of Westfield Group stapled securities for Unibail-Rodamco SE stapled securities and cash.

    For every 20 Westfield Group stapled securities you held, you received 1 OneMarket share. The OneMarket shares were received as a dividend on the WCL shares – so that for each WCL share there was a dividend of $0.0677.

    Second transaction – exchange of Westfield Group stapled securities for Unibail-Rodamco SE stapled securities and cash

    On 7 June 2018, all of the Westfield Group stapled securities were exchanged for Unibail-Rodamco SE stapled securities and cash. For each Westfield Group stapled security you received, in total, $8.9241 of value made up of both:

    • a cash amount of $3.5153    
      • This is the Australian dollar equivalent of the USD$2.67 you were actually entitled to. If you choose to receive the cash in New Zealand dollars or US dollars, we accept that the Australian dollar equivalent is $3.5153 (and is applied in the way described in the table).
       
    • 0.01844 of a Unibail-Rodamco SE stapled security, worth $5.4088 on 7 June 2018.

    As each of your Westfield Group stapled securities consist of a unit in each of the two trusts and a share in a company, we accept that the actual exchanges are described in the table below (this is important for working out your capital gain or capital loss):

    Westfield Group stapled security exchanged for Unibail-Rodamco SE stapled securities and cash

    Exchange

    Cash

    0.01844 of a Unibail-Rodamco share

    0.01844 of a
    Newco BI share

    Total – stapled securities and cash

    Each WAT unit was exchanged for:

    • 0.01844 shares in Newco BI
    • US$2.25338 of cash

     

    $2.9668

    Nil

    $0.2449

    $3.2117

    Each WFDT unit was exchanged for:

    • 0.0120413 shares in Unibail-Rodamco SE
    • US$0.41662 of cash.

     

    $0.5485

    $3.3720

    Nil

    $3.9205

    Each WCL share was exchanged for:

    • 0.0063987 shares in Unibail-Rodamco SE

     

    Nil

    $1.7919

    Nil

    $1.7919

    Total

    $3.5153

    $5.1639

    $0.2449

    $8.9241

    Section 9 of the Westfield Securityholder Booklet stated that an apportionment of the AUD amount of the “Scheme Consideration” (that is, the disposal proceeds) based upon the NTA percentages of WFDT (45.8%), WAT (32.8%) and WCL (21.4%) as published by Westfield as at 31 December 2017 would be appropriate. Due to fluctuations in the Unibail-Rodamco share price and exchange rates, the final allocations of the Scheme Consideration as per the table (that is, WFDT 43.9%, WAT 36.0% and WCL 20.1%) are slightly different.

    Income tax implications for Westfield Group stapled security holders

    First transaction – receipt of OneMarket shares

    Dividend

    First, in your 2018 tax return you must include an unfranked dividend of $0.0677 × the number of your Westfield Group stapled securities. (If you have a substituted accounting year it may be a different tax return.)

    In July 2018, Westfield sent you your annual tax statement, which showed you this amount.

    Cost base of your OneMarket shares

    Second, you must keep CGT cost base records for your OneMarket shares:

    • Cost base per OneMarket share on 7 June 2018 = $1.354
    • Date of acquisition = 7 June 2018.

    Second transaction – exchange of Westfield Group stapled securities for Unibail-Rodamco SE stapled securities and cash

    You must work out three things:

    • whether you made a capital gain or capital loss from exchanging each of your WAT units, WFDT units and WCL shares
    • whether you made a net capital gain or a net capital loss for the year
    • the CGT cost base and acquisition date of the shares that make up your new Unibail-Rodamco SE stapled securities.

    Capital gain or loss from exchanging Westfield Group stapled securities

    First, work out your capital gain or capital loss by comparing:

    • the cost base of each of your WAT units on 7 June 2018 to your exchange proceeds ($3.2117 – see table above)
    • the cost base of each of your WFDT units on 7 June 2018 to your exchange proceeds ($3.9205 – see table above)
    • the cost base of each of your WCL shares on 7 June 2018 to your exchange proceeds ($1.7919 – see table above).

    If your exchange proceeds are more than your cost base – you made a capital gain.

    If your reduced cost base is more than your exchange proceeds – you made a capital loss.

    See Appendix A for help on how to work out the cost base of your WAT units, WFDT units and WCL shares (which make up your Westfield Group stapled securities) on 7 June 2018.

    Scrip for scrip roll-over for WCL shares

    If you made a capital gain on your WCL shares and you are not a Minimum Holder, you can choose CGT roll-over to disregard that capital gain. You cannot choose roll-over in respect of your WAT units and WFDT units.

    Pre-CGT WCL shares or WFDT units

    If you made a capital gain or capital loss on your WCL shares or WFDT units that you acquired, or are taken to have acquired, before 20 September 1985, you disregard that capital gain or capital loss.

    Net capital gain or net capital loss for the 2018 year

    Second, calculate your net capital gain or net capital loss for the 2018 income year. This involves taking into account:

    • the capital gain or capital loss you make for the WAT units, WFDT units and WCL shares that is not disregarded
    • any other capital gains or capital losses you make in the 2018 income year from other transactions
    • any net capital losses carried forward from earlier income years
    • whether you can apply the CGT discount to any part of your net capital gain.

    CGT discount

    If you are an individual and you have held your WAT units, WFDT units and WCL shares for more than 12 months, it may be possible to apply the 50% CGT discount to part of your net capital gain.

    For complying superannuation funds, the CGT discount percentage is 33 1/3%.

    CGT cost base of your new Unibail-Rodamco SE CHESS Depository Interests (CDIs)

    Australian residents received Unibail-Rodamco CDIs, which are traded on the ASX (unless you elected to receive Unibail-Rodamco SE stapled securities).

    Twenty Unibail-Rodamco CDIs are equal to 1 Unibail-Rodamco SE stapled security. This means that each CDI represents 0.05 of a Unibail-Rodamco SE stapled security.

    If you received Unibail-Rodamco CDIs, you must keep CGT cost base records for your new CDIs. Each CDI represents 0.05 of a Unibail-Rodamco SE stapled security.

    If you are a Minimum Holder (a Westfield Group stapled security holder who only received cash on 7 June 2018 because the CDIs you would have otherwise received were worth less than $500 on 30 May 2018), you do not need to work out the cost base of your CDIs.

    Apply the following rules to each parcel of Westfield Group stapled securities you acquired at different times, and for different prices, to work out the effective cost base of the CDIs you receive for that particular parcel of Westfield Group stapled securities.

    The cost base for your new Unibail-Rodamco CDIs will be different depending on whether you choose CGT roll-over for your WCL shares or not.

    You can only choose CGT roll-over if you made a capital gain from the exchange of a WCL share.

    You have to work out whether you are able to choose CGT roll-over for each parcel of those WCL shares.

    If you did NOT choose CGT roll-over for your WCL shares

    The cost base for each of your Unibail-Rodamco CDIs = $14.67.

    If you DID choose CGT roll-over for your WCL shares 

    If you choose CGT roll-over for your WCL shares, as the calculations may be complex, consider using the Westfield Group - 2018 calculator.

    As you can only choose CGT rollover in respect of WCL shares, the rollover will only be relevant to the cost base of the portion of the Unibail-Rodamco shares that you receive for your WCL shares. The ATO accepts that the portion of the Unibail-Rodamco shares that were received in respect of your WCL shares was 34.7% and the portion that were not received in respect of your WCL shares was 65.3%.

    The cost base of each Unibail-Rodamco CDI you received in respect of the rolled over component of your Westfield Group stapled security is worked out as:

    Cost base of each WCL Share divided by 0.127974 plus $0.6641

    This formula reflects the outcome whereby for the 34.7% of the Unibail-Rodamco shares you received in consideration for the rolled over WCL shares, the cost base you will have for the resultant CDIs is based on your cost base in the rolled over WCL shares as at 7 June 2018, adjusted to reflect the fact that: (1) each CDI represents 0.05 of a Unibail-Rodamco SE stapled security; and (2) each Unibail-Rodamco SE stapled security comprises both a Unibail-Rodamco share and a Newco BI share.

    The cost base of each Unibail-Rodamco CDI you received in respect of the non-rolled over component of your Westfield Group stapled security is $14.67.

    Date of acquisition of your new Unibail-Rodamco CDIs

    The date which you acquired, or are taken to have acquired, your new Unibail-Rodamco CDIs is relevant to determining if you are eligible for the CGT discount when you ultimately sell those securities in the future.

    If you do not choose CGT roll-over in respect of your WCL shares, you are taken to have acquired all of your new Unibail-Rodamco CDIs on 7 June 2018.

    If you choose CGT roll-over in respect of your WCL shares, then you will be taken to have acquired:

    • 34.70% of your Unibail-Rodamco CDIs on the date you acquired the WCL shares
    • 65.30% of your Unibail-Rodamco CDIs on 7 June 2018.

    Summary

    The following table summarises the cost base and acquisition date for your Unibail-Rodamco CDIs where you choose rollover for your WCL shares in respect of your parcel.

    Cost-base and acquisition date for your Unbail-Rodamco CDIs – rolled over and not rolled over

    Rollover choice

    Date of Acquisition

    Proportion of CDIs

    Cost Base of each Unibail-Rodamco CDI

    rolled over WCL

    Acquisition date of WCL share*

    34.70%

    Cost base of each WCL Share divided by 0.127974 plus $0.6641

    non-rolled over WCL

    7 June 2018

    65.30%

    $14.67

    * If you sell your CDIs before 7 June 2019, for the CGT discount purposes, a small part of your CDIs that represent shares in Newco BI will have an acquisition date of 7 June 2018. See Selling your CDIs on or before 6 June 2019 below.

    Fractional interests

    Under the exchange of your Westfield Group stapled securities, if you were entitled to a fractional interest to a Unibail-Rodamco SE stapled security, you received cash for the fractional interest. The cash received is taken into account in the calculation of the capital gain or capital loss made on your Westfield Group stapled securities.

    No cost in respect of this fractional interest is included in the cost base of your Unibail-Rodamco SE stapled securities. A cost base reduction is effectively made in the above methodology in calculating the cost base of your Unibail-Rodamco CDIs, as the calculation excludes any cost relating to fractional interests. No further adjustment is required for fractional interests.

    Selling your Unibail-Rodamco CDIs

    Selling Unibail-Rodamco CDIs on or before 6 June 2019

    If you sell your Unibail-Rodamco CDIs on, or before, 6 June 2019, you may need to know the cost base and acquisition date in respect of each of the Unibail-Rodamco SE shares and Newco BI shares that your Unibail-Rodamco CDIs represent for the purposes of working out your CGT outcomes, in particular whether the CGT discount applies.

    If you did not choose rollover in respect of your WCL shares

    If you did not choose rollover in respect of your WCL shares, you will make a capital gain on the sale of a Unibail-Rodamco CDI if the proceeds are greater than the cost base of your CDI of $14.67 and a capital loss if the proceeds are less than the cost base of your CDI of $14.67. If you have a capital gain, it is not subject to the 12 month CGT discount.

    If you choose rollover in respect of your WCL shares

    If you chose rollover in respect of your WCL shares, you may need to know the cost base and acquisition date in respect of each of the Unibail-Rodamco SE shares and Newco BI shares that your Unibail-Rodamco CDIs represent and work out if you made a capital gain or capital loss in respect of each of those shares for CGT discount purposes.

    We accept an NTA split of 95.47% for Unibail-Rodamco SE shares and 4.53% for Newco BI shares for the cost base on 7 June 2018.

    We accept an NTA split of 95.47% for Unibail-Rodamco SE shares and 4.53% for Newco BI shares for the period 7 June 2018 – 30 June 2018. If you make a sale after 1 July 2018, you will need to check URW’s website for updated Net Tangible Assets information.

    Example

    On 7 June 2018, Danny received the following CDIs:

    • 1,202 CDIs, with total cost base $17,633.34, acquired 7 June 2018
    • 638 CDIs, with total cost base of $5,146.36, deemed to be acquired 24 August 2014.

    Danny decides to sell all 1,840 CDIs on 18 June 2018 for $14.90 each for a total consideration of $27,416. It is assumed that Danny’s cost base for his CDIs did not change from 7 June 2018.

    For his 1,202 non rolled-over CDIs, Danny reports a capital gain of $14.90 - $14.67 = 23 cents per CDI, or $276.46. This amount relates to CDIs acquired on 7 June 2018 and therefore the 12 month 50% CGT discount is not available.

    For his rolled-over CDIs, Danny must determine the capital gain or capital loss on the underlying Unibail-Rodamco SE shares and Newco BI shares.

    Danny works out his capital gain or capital loss as follows:

    Type

    Unibail-Rodamco SE

    Newco BI

    Total

    NTA split

    95.47%

    4.53%

    100%

    Cost base

    $7.4023

    $0.6641

    $8.0664

    Proceeds

    $14.2250

    $0.6750

    $14.90

    Capital gain per CDI

    $6.8227

    $0.0109

    $6.8336

    Total capital gain

    $4,352.88

    $6.95

    $4,359.83

    50% CGT Discount

    Yes

    No

    -

    Therefore, Danny reports a total capital gain of $4,636.29. Danny can apply the 50% CGT discount to $4,352.88, but not to the $276.46 or $6.95.

    End of example

    Selling Unibail-Rodamco CDIs on or after 7 June 2019

    If you sell your Unibail-Rodamco CDIs on or after 7 June 2019, any capital gains made in respect of the Unibail-Rodamco CDIs will be eligible for the CGT discount.

    If you sell your Unibail-Rodamco CDIs, your capital gain or capital loss will be the difference between the proceeds you receive and your cost base. This assumes you choose to net off any capital gain or capital loss on the underlying Unibail-Rodamco shares and Newco BI shares.

    Example

    On 7 June 2018, Danny received the following Unibail-Rodamco CDIs:

    • 1,202 CDIs, with total cost base $17,633.34, acquired 7 June 2018; and
    • 638 CDIs, with total cost base of $5,146.36, deemed to be acquired 24 August 2014.

    Danny decides to sell all of his 1,840 CDIs on 25 August 2019 for $15.50 each for a total consideration of $28,520.

    Assuming that Danny’s cost base for his CDIs did not change, Danny calculates his capital gains as follows:

    • For the 1,202 non-rolled over CDIs, Danny makes a capital gain of $997.66 ($18,631 – $17,633.34), which is eligible for the 12 month 50% CGT discount.
    • For the 638 rolled over CDIs, Danny makes a capital gain of $4742.64 ($9,889 – $5,146.36), which is eligible for the 12 month 50% CGT discount.
    End of example

    Worked example

    Verity (an Australian resident) purchased 5,000 Westfield Group stapled securities on 24 August 2014 at $7.50 each for a total purchase price of $37,500 (including brokerage costs).

    After working through steps 1 to 3 below in the example:

    • Verity has no capital gain or loss from selling her WCL shares, as she chose CGT Roll-over
    • Verity has a capital gain of $12,319.50 from selling her WAT units
    • Verity has a capital loss of $7,532 from selling her WFDT units.

    In calculating her 2018 net capital gain or net capital loss, Verity takes these amounts into account.

    Verity acquired 250 OneMarket shares with a cost base of $1.354 each (or $338.50 total) and received a dividend of $338.50. Verity will include the amount of the dividend in her 2018 income tax return.

    Verity has acquired 1,840 CDIs with the following attributes:

    • 1,202 CDIs, with total cost base $17,633.34, acquired 7 June 2018, and
    • 638 CDIs, with a total cost base of $5,146.36, deemed to be acquired 24 August 2014 (a small part of these CDIs representing shares in Newco will have an acquisition date of 7 June 2018).

    You can use the Westfield Group - 2018 calculator to perform these calculations.

    Step 1 – Capital gain or loss on WCL shares

    In order to work out the capital gain or loss on the exchange of WCL shares, the capital proceeds are compared to the cost base. As outlined in the table above, the capital proceeds for each share are $1.7919 per WCL share.

    Working out the CGT cost base for your WCL shares

    Verity checks Appendix A for the ‘Net Tangible Assets’ table to establish that at 24 August 2014, the proportion of the purchase price of the Westfield Group stapled security to reasonably allocate to WCL shares is 12.63% (using the NTA percentages as at 30 June 2014).

    This means that the CGT cost base of each of Verity’s WCL shares acquired on this date, as derived from her purchase price of the Westfield Group stapled securities, was $0.9473, (12.63% of $7.50).

    Capital gain or capital loss

    On exchanging her Westfield Group stapled securities, Verity has made a capital gain of $0.8446 per WCL share, or $4,223. If Verity decides to disregard this capital gain by choosing the CGT roll-over, this would mean the cost base of $0.9473 becomes part of the starting cost base of the acquired Unibail-Rodamco SE shares.

    If Verity does not choose the CGT roll-over, the capital gain of $4,223 will be taken into account when working out Verity’s net capital gain or net capital loss for the 2018 income year.

    Verity decides to choose the CGT roll-over.

    Step 2 – Capital gain or loss on WAT units

    In order to work out the capital gain or loss on the exchange of WAT units, the capital proceeds are compared to the cost base. As outlined in the table above, the capital proceeds for each unit are $3.2117 per WAT unit.

    Working out the CGT cost base for your WAT Units

    Verity checks Appendix A for the ‘Net Tangible Assets’ table to establish that at 24 August 2014, the proportion of the purchase price of the Westfield Group stapled security to reasonably allocate to her WAT units is 11.58% (using the NTA percentages as at 30 June 2014).

    This means that the CGT cost base of each of Verity’s WAT units acquired on this date, as derived from her purchase price of the Westfield Group stapled securities, was $0.8685 (11.58% of $7.5). This figure needs to be further adjusted, as outlined below.

    Verity checks Appendix A for the Tax Deferred Distribution components of the six monthly Westfield taxation distributions and establishes that she has received a cumulative total of 12.07 cents of tax deferred distributions from WAT since acquiring her Westfield Group stapled securities in August 2014:

    • 0.12 cents (February 2015)
    • 1.05 cents (August 2015)
    • 1.5 cents (February 2016)
    • 1.76 cents (August 2016)
    • 1.66 cents (February 2017)
    • 4.77 cents (August 2017)
    • 1.2 cents (February 2018).

    Verity reduces the CGT cost base of her WAT units by 12.07 cents to $0.7478.

    Capital gain or capital loss

    Verity subtracts her cost base of $0.7478 from her capital proceeds for each WAT unit of $3.2117 to arrive at a capital gain of $2.4639 per unit, or $12,319.50.

    Step 3 – Capital gain or loss on WFDT units

    In order to work out the capital gain or loss on the exchange of WFDT units, the capital proceeds are compared to the cost base. As outlined in the table above, the capital proceeds for each unit are $3.9205 per WFDT unit.

    Working out the CGT cost base for your WFDT Units

    Verity checks Appendix A for the ‘Net Tangible Assets’ table to establish that at 24 August 2014, the proportion of the purchase price of the Westfield Group stapled security to reasonably allocate to her WFDT units is 75.79% (using the NTA percentages as at 30 June 2014).

    This means that the CGT cost base of each WFDT unit acquired on this date is $5.6843 (75.79% of $7.5).

    Verity checks Appendix A for the Tax Deferred Distribution components of the six monthly Westfield taxation distributions and establishes that she has received a cumulative total of 25.74 cents of tax deferred distributions from WFDT since acquiring her Westfield Group stapled securities in August 2014:

    • 9.36 cents (February 2015)
    • 0.19 cents (August 2015)
    • 0.01 cents (February 2016)
    • 1.06 cents (August 2016)
    • 1.69 cents (February 2017)
    • 2.67 cents (August 2017)
    • 10.76 cents (February 2018).

    Verity reduces the CGT cost base of her WDFT units by 25.74 cents to $5.4269.

    Capital gain or capital loss

    Verity subtracts her cost base of $5.4269 from her capital proceeds for each WFDT unit of $3.9205 to arrive at a capital loss of $1.5064 per unit, or $7,532.

    Calculation of CGT cost base for the new Unibail-Rodamco CHESS Depository Interests (CDIs)

    As an Australian resident, Verity has received 1,840 CDIs (equating to 92 Unibail-Rodamco SE shares and 92 Newco BI shares).

    Verity notes that 34.70% of her CDIs (638 CDIs) contained Unibail-Rodamco shares that were rolled over, retaining the acquisition date of WCL, being 24 August 2014, and the remainder (1,202 CDIs) have a new acquisition date of 7 June 2018. A small part of these CDIs representing shares in NewCo will have an acquisition date of 7 June 2018.

    Because Verity has chosen roll-over for her WCL shares, she calculates her cost base of her CDIs containing rolled over Unibail-Rodamco shares as follows:

    • 0.9473 ÷ 0.127974 + $0.6641 = $8.0664.

    This is a cost base total of $5,146.36 for her 638 rolled over CDIs.

    For the CDIs which were not rolled over, each CDI has a cost base of $14.67 which is a total cost base of $17,633.34. Therefore, Verity’s final CDI cost base information is:

    • 1,202 CDIs, with total cost base $17,633.34, acquired 7 June 2018, and
    • 638 CDIs, with total cost base of $5,146.36, acquired 24 August 2014 (A small part of these CDIs representing shares in Newco will have an acquisition date of 7 June 2018).

    Our commitment to you

    We are committed to providing you with advice and information you can rely on.

    We make every effort to ensure that our advice and information is correct. If you follow advice in this publication and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it. If you make an honest mistake when you try to follow our advice and you owe us money as a result, we will ask you to pay the money.

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    Further information

    Class Ruling CR 2018/31 outlines capital gains consequences in relation to the sale of Westfield Group stapled securities to Unibail-Rodamco SE.

      Last modified: 27 Aug 2018QC 56126