CGT event K6 happened at the time you exchanged your pre-CGT MSF member shares on 17 September 2009 for MyState shares. Therefore, you will have a capital gain at this time.
The capital gain when CGT event K6 applies is the amount of the capital proceeds from the MSF member shares that is attributable to post-CGT assets owned by the company, less the assets' cost bases.
The capital proceeds for each of your MSF member shares is $1,178.60 - that is, 387 (the number of MyState shares you received for each of your MSF member shares) multiplied by $3.0455 (the market value of each MyState share on 17 September 2009).
The ATO accepts MSF's submission that there are no unrealised gains on the post-CGT property. Therefore, there is no net capital gain under CGT event K6.
You do not need to include any amount in your 2009-10 tax return from the exchange of your pre-CGT MSF member shares. You will need to keep records showing the cost base for your MyState shares.
Your cost base for the 387 MyState shares is $1,178.60, or $3.0455 per share. You will use this cost base when you sell or otherwise dispose of some or all of your MyState shares.
For more information on CGT event K6 generally, see Taxation Ruling TR 2004/18.End of further information
Example 7: Exchanging pre-CGT MSF member shares for MyState shares
Helen acquired one MSF member share before 20 September 1985 for $10. On 17 September 2009, Helen transferred her MSF member share to MyState Limited in exchange for 387 MyState shares. The MyState shares were valued at $3.0455 each on 17 September 2009.
Helen does not make a capital gain from CGT event K6, as explained above. Therefore, Helen does not need to include any amount in her 2009-2010 tax return from the exchange of her MSF member share. The cost base of Helen's 387 MyState shares is $1,178.60, or $3.0455 per share. Helen will use this cost base for her calculations when she eventually sells or otherwise disposes of some or all of her MyState shares.End of example
What are the CGT consequences when I sell or otherwise dispose of my MyState shares?
A CGT event happens when you sell or otherwise dispose of your MyState shares - including selling them via the share sale facility offered as part of the MSF scheme. To calculate the capital gain or loss from this CGT event, refer to the fact sheet information on What are the CGT consequences when I sell or otherwise dispose of my MyState shares?
Example 8: Selling MyState shares via the share sale facility after exchanging pre-CGT MSF member shares for MyState shares
Helen acquired 387 MyState Shares on 17 September 2009 in exchange for her MSF Member Share. Helen had originally purchased her MSF member share before 20 September 1985 for $10.
Helen does not make a capital gain from CGT event K6 for the exchange of her MSF member share - refer to example 7.
Helen then sold all of her MyState shares on 22 September 2009 in the share sale facility without any brokerage costs that was offered as part of the MSF scheme. The MyState shares were sold for $2.50 each.
Helen calculates her capital gain or capital loss from the disposal of her MyState shares as follows:
- cost base (reduced cost base of her 387 MyState shares = $1,178.60 (387 x $3.0455)
- capital proceeds from her 387 MyState shares = $967.50 (387 x $2.50)
- capital loss made when selling her MyState shares = $211.10 ($967.50 - $1,178.60).
Helen can use her capital loss of $211.10 to reduce any capital gains she made in the 2009-10 income year. If she made no capital gains in 2009-10, she can carry forward her capital loss to her next year's tax return, and so on, until she is able to use it.End of example