TABLE OF CONTENTS


PMGold

https://teresatranassociates.freshdesk.com/a/tickets/77695


4. Tax summary



7. Interpretation

“PMG Management Fee” until 31 December 2021 means a fee charged each year at the close of trading on ASX on  31 December which covers the operating expenses incurred by the Issuer for the PMG in accordance with clause 9.  From 1 January 2022 means the fee paid by investors through daily reductions in the Metal Entitlement of a PMG




Gold.asx 

9.3 Sale of Metal Securities

The investor will make a capital gain on the disposal of the Metal Share or the Bullion where the capital proceeds received by the investor exceeds their cost base in these assets. If the capital proceeds received by an investor are less than the investor's reduced cost base in these assets, then the investor will make a capital loss. Capital losses can be offset against capital gains made by an investor but not against other types of income. The cost base that an investor has in a Metal Share or the Bullion comprising a Metal Security is, broadly, the sum of the following as allocated between the Metal Share and the Bullion on a reasonable basis: 

  1. the amount the investor paid to acquire the Metal Security; 
  2. incidental costs of acquisition and disposal (e.g. professional advisory fees, the costs of transfer such as brokerage fees and stamp duty if any); and 
  3. the costs of ownership of the Metal Security (e.g. interest incurred by an investor as a result of borrowing funds to acquire the Metal Security where the interest is not otherwise allowable as a tax deduction). 

The reduced cost base of a Metal Share or the Bullion comprising a Metal Security includes 1 and 2 but not 3 of the matters listed immediately above.


The cost base that an investor has in the Bullion comprising a Metal Security should include the Management Fee as a cost of ownership of the Bullion. The Management Fee does not factor into an investor's cost base in their Metal Share as it is a fee related to the ownership of the Bullion.


9.5 Management Fee 

The Management Fee will accrue daily (and be retained until the end of each month when the Bullion will be sold) and reduce the per share entitlement to the Bullion at the end of each day. The sale proceeds will be paid by the Trustee to the Company pursuant to the Service Agreement. Accordingly, every month the investor will be considered to have sold part of their interest in the Bullion. 


Broadly, the above discussion of the income tax and CGT consequences for an investor disposing of the Bullion component of their Metal Securities will apply equally here. The cost base/cost that an investor had in their Bullion component prior to this sale will be apportioned between 

  • the Bullion which is sold under the Management Fee 
  • and the Bullion which the investor continues to hold.


As noted above the Management Fee will be included in an investor’s cost base in the Bullion component of their Metal Securities as a cost of ownership of the Bullion. It does not, however, factor into an investor’s reduced cost base in the Bullion component. Accordingly, whilst the Management Fee may reduce any capital gain made by an investor on the disposal of the Bullion it will not increase any capital loss made. 


If an investor holds a Metal Security in the course of carrying on a business of dealing in securities then the Management Fee may be deductible as an ordinary expense, factored into the calculation of a trading stock gain or loss, or could reduce consideration ultimately received.


Example