• Tax consequences when selling OFM demutualisation shares

    The changes to the law mean that:

    • you are taken to have acquired your demutualisation shares in OFM on 12 June 2001 (the demutualisation resolution day)
       
    • the first element of the CGT cost base and reduced cost base of each demutualisation share is $1.65
       
    • capital losses made on the sale of the shares before 26 March 2002 - that is, the date the company was listed on the ASX, cannot be claimed. If you claimed such capital losses and had a net capital gain for the relevant year, or would have had a net capital gain had you not claimed them, you will need to request an amendment.

    What to do if you used the wrong cost base

    If you:

    • received demutualisation shares in OFM
    • sold them in the 2001-02 or 2002-03 income year
    • used an amount other than $1.65 as the first element of the cost base and reduced cost base, and
    • declared a net capital gain for that year, or would have had a net capital gain had you used $1.65

    you will need to request an amendment to your assessment.

    If the amount of 'net capital losses carried forward to later income years' recorded for the income year in which you sold the shares was wrong and this resulted in you not declaring a net capital gain in the later income year, you will need to request an amendment to the return for the later income year.

    In other cases where you used an amount other than $1.65 as the first element of the cost base and reduced cost base, you will need to adjust the amount of 'net capital losses carried forward to later income years' you have recorded - no amendment is required to your assessment.

      Last modified: 06 Oct 2009QC 17549