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Scrip for scrip rollover relief

Last updated 29 August 2016

Scrip for scrip rollover allows you to defer a CGT gain until a later CGT event happens to your shares. Scrip for scrip rollover relief is available for this merger. You don't have to choose the rollover if you don't want to.

Further information

For more information on scrip for scrip rollover relief, see Takeovers and mergers, scrip-for-scrip rollover.

End of further information

If you choose scrip for scrip rollover

If you choose scrip for scrip rollover, the capital gain made from exchanging your MSF member shares is disregarded and the cost base of your MyState shares is now based on the cost base of the original MSF member shares.

Attention

When you eventually dispose of your MyState shares, if the combined period that you owned the original MSF member shares and the relevant MyState shares is at least 12 months, you can apply the CGT discount.

End of attention

Example 2: Exchanging MSF member shares for MyState shares and electing rollover relief

Ivan acquired one MSF member share on 30 July 2007 for $10. On 17 September 2009, Ivan transferred his 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.

Ivan calculates his capital gain or loss as follows:

  • Cost base of his MSF member share = $10
  • Capital proceeds from his MSF member share = $1,178.60 (387 x $3.0455)
  • Capital gain made on 17 September 2009 = $1,168.60 ($1,178.60 - $10).

However, at this time, Ivan elects for scrip for scrip rollover relief, so he disregards this capital gain. Ivan does not need to include any amount in his 2009-10 tax return from the exchange of his MSF member share. He will keep records showing this election and the new cost base for his MyState shares.

The new cost base of Ivan's 387 MyState shares is $10 (that is, $0.02584 per share). Ivan will use this cost base for his calculations when he eventually sells or otherwise disposes of some or all of his MyState shares.

End of example

If you do not choose scrip for scrip rollover

If you have made a capital loss, or have made a capital gain but do not choose scrip for scrip rollover, include these amounts in item 18 Capital gains in the supplementary section of your 2009-10 tax return.

The cost base of each of your new MyState shares is $3.0455.

Attention

If you have made a capital gain and held your MSF member shares for at least 12 months, you may be entitled to the CGT discount of 50%.

End of attention

Example 3: Exchanging MSF member shares for MyState shares but not electing rollover relief

Kathy acquired one MSF member share on 30 July 2007 for $10. On 17 September 2009, Kathy 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.

Kathy calculates her capital gain or loss as follows:

  • Cost base of her MSF member share = $10
  • Capital proceeds from her MSF member share = $1,178.60 (387 x $3.0455)
  • Capital gain made on 17 September 2009 = $1,168.60 ($1,178.60 - $10).
  • Kathy does not elect scrip for scrip rollover relief.

As Kathy held her MSF member share on capital account for more than 12 months, she is entitled to the CGT discount of 50%. Kathy did not have any capital losses from this year or any unapplied net capital losses from earlier years, so she is able to apply the 50% CGT discount to the current year capital gain of $1,168.60. Kathy's capital gain is therefore reduced to $584.30.

Kathy will include the details of this capital gain at item 18 Capital gains in the supplementary section of her 2009-10 tax return by showing $1,168 at label H (Total current year capital gains) and $584 at label A (Net capital gain).

The cost base of Kathy's 387 MyState shares is $1,178.60 (that is, $3.0455 per share). Kathy 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,

You may make a capital gain or a capital loss on the disposal of your MyState shares, depending on their cost base, or reduced cost base, and the amount you receive for them (your capital proceeds). If your capital proceeds are more than cost base of your MyState shares, you will make a capital gain. If your capital proceeds are less than the reduced cost base of your MyState shares, you will make a capital loss.

If you sold your MyState shares via the share sale facility offered as part of the MSF scheme, your capital proceeds were $2.50 per share.

Attention

Your MyState shares may have had different cost bases or reduced cost bases, so it is possible for you to have made both a capital loss and a capital gain on different MyState shares.

End of attention
Further information

For information on how to work out the cost base and reduced cost base for shares, refer to the Guide to capital gains tax.

End of further information

If you sold some or all of your MyState shares on or before 30 June 2010 (including selling them via the share sale facility offered as part of the MSF scheme), you will need to include the details of your capital gain or capital loss at item 18 Capital gains in the supplementary section of your 2009-10 tax return.

Example 4: Selling MyState shares via the share sale facility after electing rollover relief when exchanging MSF member shares for MyState shares

Ivan acquired 387 MyState shares on 17 September 2009 in exchange for his MSF member share. Ivan had originally purchased his MSF member share on 30 July 2007 for $10.

Ivan elected for scrip for scrip rollover relief to disregard any capital gain when he exchanged his MSF member share for the MyState shares, so the cost base of Ivan's 387 MyState shares is now $10 (that is, $0.02584 per share) - refer to example 2 to see how this was worked out.

Ivan then sold all of his MyState shares for $2.50 each via the share sale facility without any brokerage costs that was offered as part of the MSF scheme. Ivan calculates his capital gain or capital loss from selling his MyState shares as follows:

  • cost base of his 387 MyState shares = $10, (387 x $0.02584 per share)
  • capital proceeds from his 387 MyState shares = $967.50, (387 x $2.50 per share)
  • capital gain made when selling his MyState shares = $957.50, ($967.50 - $10).

As Ivan held his MyState shares and the MSF member share for a combined period of more than 12 months, he is entitled to the CGT discount of 50%. Ivan did not have any capital losses from this year or any unapplied net capital losses from earlier years, so he can apply the 50% CGT discount to the current year capital gain of $957.50. Ivan's capital gain is therefore reduced to $478.75.

Ivan writes $957 at label H (Total current year capital gains) and $478 at label A (Net capital gain) at item 18 Capital gains in the supplementary section of his 2009-10 tax return.

End of example

 

Example 5: Selling MyState shares via the share sale facility but not electing rollover relief when exchanging MSF member shares for MyState shares

Kathy acquired 387 MyState shares on 17 September 2009 in exchange for her MSF member share. Kathy had originally purchased her MSF member share on 30 July 2007 for $10.

Kathy chose not to elect scrip for scrip rollover relief to disregard any capital gain at the time she exchanged her MSF member share. Kathy calculated a capital gain from the exchange of her MSF member share with MyState shares of $1,168.60 (prior to the 50% CGT discount - refer to example 3 to see how this was worked out). The cost base of Kathy's 387 MyState shares is $1,178.60 (that is, $3.0455 per share).

Kathy then sold all of her MyState shares for $2.50 each via the share sale facility without any brokerage costs that was offered as part of the MSF scheme.

Kathy calculates her capital gain or capital loss from the disposal of her MyState shares as follows:

  • 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).

Kathy has to take into account both the capital gain from the exchange of her MSF member share and the capital loss from the sale of the MyState shares when working out her answer to item 18 Capital gains in the supplementary section of her 2009-10 tax return, as follows.

Kathy first subtracts her capital loss of $211.10 from her capital gain of $1,168.60. As Kathy has no other current year losses or unapplied net capital losses from earlier years, she can apply the 50% CGT discount to this reduced capital gain of $957.50. Kathy's capital gain for the year is therefore $478.75.

Kathy writes $478 at label A (Net capital gain) at item 18 Capital gains in the supplementary section of her 2009-10 tax return.

End of example

 

Example 6: Selling MyState shares on the ASX after electing rollover relief when exchanging MSF member shares for MyState shares

Arthur acquired 387 MyState shares on 17 September 2009 in exchange for his MSF member share. Arthur had originally purchased his MSF member share on 30 July 2007 for $10.

Arthur also elected for scrip for scrip rollover relief to disregard any capital gain when he exchanged his MSF member share for the MyState shares, so the cost base of Arthur's 387 MyState shares is now $10 (that is, $0.02584 per share).

Arthur did not sell any of his MyState shares via the share sale facility without any brokerage costs that was offered as part of the MSF scheme. Instead, Arthur sold 200 of his shares on the ASX on 15 April 2010 for $3.40 each. Arthur paid $25 in brokerage fees for this sale.

Arthur calculates his capital gain or capital loss from the sale of his 200 MyState shares as follows:

  • cost base of his 200 MyState shares = $30.17 (200 x $0.02584 per share + $25 brokerage costs)
  • capital proceeds from his 200 MyState shares = $680.00 (200 x $3.40 per share)
  • capital gain made when selling his 200 MyState shares = $649.83 ($680.00 - $30.17).

As Arthur held the 200 MyState Shares and the MSF Member Share on capital account for a combined period of more than 12 months, he is entitled to the CGT discount of 50%. Arthur did not have any capital losses from this year, or any unapplied net capital losses from earlier years so he is able to apply the 50% CGT discount to the current year capital gain of $649.83. Arthur's capital gain is therefore reduced to $324.92.

Arthur writes $649 at label H (Total current year capital gains) and $324 at label A (Net capital gain) at item 18 Capital gains in the supplementary section of his 2009-10 tax return.

End of example

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