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 dividend that you received was compulsorily used to purchase one WFT unit and one WFA unit for each WSF share that you held. The purchase price of both units was $0.001 each. The following table gives the cost base (reduced cost base) of each element of your new stapled securities immediately after the stapling arrangement was completed:
Initial cost base (reduced cost base)
Cost base of original shares at stapling time
Example - staple
Maude acquired 1,000 shares in WSF in June 2002. Immediately before the merger the cost base of her shares was $14.80 per share (total cost base is $14,800).
Maude did not chose to exchange her shares for Westfield Group stapled securities. Her shares were therefore involved in a stapling arrangement. Maude received a franked dividend of $2 ($0.002 x 1,000). Her dividend statement showed a fully franked dividend of $2 and a franking credit of $0.86.
This dividend was compulsorily applied to buy WFT and WFA units, which were stapled with her shares to make up Westfield securities.
Recording the dividend on the tax return
On her tax return for the 2004-05 income year, Maude includes both the franked dividend of $2 and the franking credit of $0.86 in her assessable income (at item 11). (When her tax return is processed, the Tax Office automatically also allows her the franking credit as a tax offset, which reduces her tax payable.)
Working out new cost bases
Maude retains her WSF shares at their original cost base. She has acquired new WFT and WFA units at the cost of $0.001 each. The cost base of each of the elements of Maude's Westfield Group stapled securities immediately after the stapling arrangement was completed on 16 July 2004 were as follows:
- WSF shares ($14.80 x 1,000) = $14,800
- WFT units ($0.001 x 1,000) = $1
- WFA units ($0.001 x 1,000) = $1
There are no CGT consequences for Maude as a result of the stapling of each WSF share to each new WFA unit and WFT unit.