20211119 | Aristocrat retail entitlement offer TR 2017/4
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Created by: Christopher Le
Modified on: Tue, 4 Feb, 2025 at 3:04 PM
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- If you sell your Retail Entitlement on ASX or otherwise, you should derive a capital gain for capital gains tax (CGT) purposes.
- Shareholders will have no cost base for their Retail Entitlements unless they incur certain non-deductible incidental costs associated with the sale. Therefore, a capital gain made on sale will be equal to the sale proceeds (or deemed market value capital proceeds if Retail Entitlements are transferred in a dealing which is not considered at arm’s length, for other than market value consideration) less any relevant non-deductible costs of disposal.
- Shareholders will be treated as having acquired their Retail Entitlement on the same date as they acquired the Existing Shares which gave rise to the Entitlement. Accordingly, individuals, complying superannuation entities or trustees that have held their Existing Shares for at least 12 months prior to the date of sale should be entitled to discount the amount of a capital gain resulting from the sale of the Retail Entitlements (after the application of any current year or carry forward capital losses).
Retail Entitlements sold into the Retail Shortfall Bookbuild
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- Any Retail Entitlements not taken up, sold or transferred by you will be sold into the Retail Shortfall Bookbuild on your behalf and any Retail Premium you receive in respect of the Retail Entitlements will be paid to you.
- Any Retail Premium paid to you as a result of the sale (on your behalf) of your Retail Entitlements into the Retail Shortfall Bookbuild should give rise to a capital gain under the CGT provisions. This is consistent with the views of the Commissioner of Taxation (Commissioner) in Taxation Ruling TR 2017/4 ‘Income tax: taxation of rights and retail premiums under renounceable rights offers where shares held on capital account’.
- Shareholders will be treated as having acquired their Retail Entitlement on the same date as they acquired the Existing Shares which gave rise to the Entitlement. Accordingly, Australian resident Eligible Retail Shareholders who are individuals, complying superannuation entities or trustees that have held their Existing Shares for at least 12 months prior to the date of sale, should be entitled to the CGT discount (see above) in respect of any capital gain resulting from the sale of the Retail Entitlements into the Retail Shortfall Bookbuild (after the application of any current year or carry forward capital losses).
Christopher is the author of this solution article.
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