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 America 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).
Initial cost base (reduced cost base)
$15.48 x 9.09%
$15.48 x 52.39%
$15.48 x 38.52%
Example -sale facility receiving stapled securities
Mario acquired 1,000 units in WFA in July 2000. Immediately before the sale arrangement commenced, the cost base of his units was $1,740 (or $1.74 per unit). Mario's units were consolidated as the first step of the sale arrangement. After consolidation, he held 150 (1,000 x 0.15) units with a cost base of $1,740 (or $11.60 per unit).
Mario chose to exchange his WFA units for Westfield Group stapled securities. He received 150 Westfield Group stapled securities in exchange for his WFA units. The Commissioner will accept that Mario'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
Mario makes a capital gain on the disposal of 150 units as follows:
Capital proceeds (150 x $15.48)
less total cost base
Because Mario 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). Mario will include a $291 ($582 x 50%) 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, Mario 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: $291
Total current year capital gains: $582
Working out new cost bases
Mario will calculate the cost base and reduced cost base of his WSF units, WFT and WFA units as follows:
WSF units ($1.41 x 150) = $211.50
WFT units ($8.11 x 150) = $1,216.50
WFA units ($5.96 x 150) = $894.00