Each Westfield Group stapled security is made up of:
- one Westfield Holdings Limited (WSF) share
- one Westfield Trust (WFT) unit
- 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 Holdings shares 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
Amiel acquired 1,000 shares in WSF in June 2002. Immediately before the merger the cost base of his shares was $14.80 per share (total cost base is $14,800).
Amiel chose to exchange his WSF shares for Westfield Group stapled securities. He received 1,000 Westfield Group stapled securities in exchange for his WSF shares. The Commissioner will accept that Amiel's capital proceeds for the exchange of his shares 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
Amiel makes a capital gain on the disposal of 1,000 shares as follows:
Capital proceeds (1,000 x $15.48)
less total cost base (1,000 x $14.80)
Because Amiel had held his shares 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). Amiel will include a $340 ($680 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, Amiel 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: $340
Total current year capital gains: $680
Working out new cost bases
Amiel will calculate the cost base and reduced cost base of his WSF shares, WFT and WFA units as follows:
- WSF shares ($1.41 x 1,000) = $1,410
- WFT units ($8.11 x 1,000) = $8,110
- WFA units ($5.96 x 1,000) = $5,960