• Examples

    Example 1

    Neville purchased a parcel of 800 Woolworths shares in 1999 for $5.380 per share including brokerage.

    Neville purchased another parcel of 200 Woolworths shares in 2010 for $28.750 per share including brokerage.

    Neville still owns all of his 1,000 Woolworths shares.

    Under the distribution Neville received 200 SCA Property Group stapled securities with a market value of $287.94 (200 x $1.4397).

    For Neville, the distribution has the following components:

    • Dividend amount of 1,000 x $0.14195442 = $141.95
    • Capital return amount of 1,000 x $0.14598558 = $145.98

    The franking credit attached to the dividend amount is:

    • $141.95 x (30/70) = $60.83.

    Step 1: Neville includes the dividend amount of $141.95 and the franking credit amount of $60.83 at the dividend label of his 2012–13 tax return (along with any other dividends and franking credits he receives from Woolworths or other companies in which he owns shares).

    The franking tax offset will be automatically applied.

    Step 2: Neville must reduce the cost base of each of his Woolworths shares by the capital return amount of $0.14598558 for each share for which he received a SCA Property Group stapled security.

    Because Neville purchased his shares at different times for different prices, he must do a separate calculation for his parcel of 800 shares and his parcel of 200 shares.

    2a: The adjusted cost base of each of Neville’s 800 Woolworths shares is:

    $5.380 - $0.14598558 = $5.234

    2b: The adjusted cost base of each of Neville’s 200 Woolworths shares is:

    $28.750 - $0.14598558 = $28.604

    Step 3: Because Neville received less than 318 stapled securities (worth less than $500) he was sent the offer to have them sold in the sale facility at no cost to him.

    Neville decided he wanted the stapled securities sold so he did nothing. That is, he did not return the Unit Retention Form.

    Neville's 200 stapled securities were sold in the sale facility and he was sent $326.94 ($1.6347 for each stapled security).

    Neville has to work out the capital gain on the separate unit in SCA Property Retail Trust and SCA Property Management Trust that made up each stapled security.

    SCA Property Retail Trust unit

    • Capital proceeds of $1.6248918 ($1.6347 x 99.4%)
    • Less cost base of $1.4310618
    • Capital gain $0.19383
    • Total capital gain $38.766 ($0.19383 x 200 units)

    SCA Property Management Trust unit

    • SCA Property Retail Trust unit
    • Capital proceeds of $0.0098082 ($1.6347 x 0.6%)
    • Less cost base of $0.0086382
    • Capital gain $0.00117
    • Total capital gain $0.234 ($0.00117 x 200 units)

    Neville therefore made a total capital gain of $39 on the sale of his stapled securities in the sale facility.

    Neville cannot apply the 50% discount to this capital gain because he did not hold the stapled securities for more than 12 months.

    Assume Neville has no other capital gains for the year and no current year or prior year unapplied capital losses.

    At the capital gains label on his tax return (supplementary section) Neville answers that he had a capital gains tax event during the year and writes 39 in the Net capital gain and Total current year capital gains fields.

    Example 2: Shares sold before 11 December 2012

    Stacey acquired 2,000 Woolworths shares in 2002 and worked out their total cost base including brokerage was $23,000.00, or $11.50 each.

    Stacey sold all of her 2,000 shares on 10 December 2012 for $58,800.00, or $29.40 each. She paid $100.00 brokerage.

    Step 1: Stacey works out the capital gain on the sale of her shares.

    • Capital proceeds of $58,800.00
    • Less cost base of $23,000.00 + 100.00 = $23,100.00
    • Capital gain = $35,700.00

    Because Stacey owned Woolworths shares on 30 November 2012 she had a right to receive SCA Property Group stapled securities under the distribution.

    Even though she no longer owned her Woolworths shares that gave her the right, Stacey still received 400 SCA Property Group stapled securities on 11 December 2012 valued at $575.88 (400 x $1.4397).

    For Stacey, the distribution has the following components:

    • Dividend amount of 2,000 x $0.14195442 = $283.90
    • Capital return amount of 2,000 x $0.14598558 = $291.97

    The franking credit attached to the Dividend amount is:

    $283.90 x (30/70) = $121.67

    Step 2: Stacey has to work out the capital gain on the ending of the right to receive the SCA Property Group stapled securities.

    • Capital proceeds of 400 x $1.4397 = $575.88
    • Less cost base of nil
    • Capital gain = $575.88

    Step 3: Stacey reduces the capital gain by her Dividend amount of $283.90.

    • Capital gain of $575.88
    • Less dividend amount of $283.90
    • Adjusted capital gain = $291.98

    Step 4: Completing her 2012–13 tax return

    4a Dividend

    Stacey must include the dividend amount of $283.90 and the franking credit amount of $121.67 at the Dividends label (along with any other dividends and franking credits for the year from Woolworths and any other companies in which she owns shares).

    Stacey will automatically receive any franking tax offset she is entitled to.

    4b Capital gains

    Stacey must include her Total current year capital gains and her Net capital gain at the Capital gains label on her tax return (supplementary section).

    Assume Stacey has no other capital gains or capital losses for the year but has a prior year net capital loss of $50.00 to apply.

    • Capital gain on the sale of her Woolworths shares of $35,700
    • Capital gain on the ending of the right to receive stapled securities = $291.98
    • Stacey’s total capital gain = $35,991.98
    • Less prior year net capital loss of $50.00 = $35,941.98
    • Stacey now applies the 50% CGT discount $35,941.98 x 50% = $17,970.99
    • Net capital gain = $17,970.99

    Step 5: Because Stacey received more than 318 stapled securities (valued at more than $500) she was not offered the opportunity to sell them in the sale facility. She intends to sell them in future on-market.

    Stacey keeps record of the cost base of each unit that makes up each stapled security as follows:

    • SCA Property Retail Trust units = $1.4310618
    • SCA Property Management Trust units = $0.0086382

    Find out more

    For help applying this information to your own situation, you may seek advice from a recognised tax adviser or phone us on 13 28 61.

    End of find out more
      Last modified: 19 Aug 2013QC 32389