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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.

    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 (i.e. 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 (i.e. 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” (ie 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 (ie 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 x 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 (see below), 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.

    End of example

    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%.

    End of example

    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).

    20 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.

    End of example

    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 ÷ 0.127974 + $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 ÷ 0.127974 + $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.
      Last modified: 13 Jul 2018QC 56126