More information

• Class Ruling CR 2007/67 'Income tax: scrip-for-scrip: acquisition of Smorgon Steel Group Limited by OneSteel Limited'.
• Guide to capital gains tax (NAT 4151)

Terms explained

Cost base, reduced cost base and acquisition date

Your CGT records for your Smorgon shares should show you your cost base and acquisition date for each parcel of your Smorgon shares. Generally, the cost base of shares is the purchase price and any incidental costs such as transfers, stamp duties, and fees charged by consultants, accountants, lawyers or brokers.

For calculations where you have to work out a capital loss, you use reduced cost base rather than cost base. Your reduced cost base does not include indexation or certain other expenditure.

For most people your reduced cost base is the same as your cost base.

Discounted capital gain

If you work out your capital gain using the 'discount method', you reduce (or discount) it using the 'CGT discount'. The result is referred to as a 'discounted capital gain'. If you use the discount method to work out your capital gain, you do not index the cost base.

Parcel of shares

If you acquire more than one share on a particular date for a particular price, we refer to those shares as a parcel of shares. For example, you may have bought Smorgon shares on two occasions on the Australian Stock Exchange (ASX) - each of these acquisitions is a separate parcel.

Although each share is a separate CGT asset, it is usually more convenient to work out the CGT consequences for each parcel of shares.

Scrip-for-scrip rollover

Allows you to defer your CGT obligation until a later CGT event happens to your shares. The company in which you have holdings usually advises you if the rollover conditions have been satisfied.

If you received shares plus cash for your original shares, you may be eligible only for partial rollover. If the information provided by the company is not sufficient for you to work out your capital gain, you may need to seek advice from us.