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Article 347: Merger - AGL and Alinta |
| Article Description |
Rename AGL to AGL Energy, record a Return of Capital, record a purchase of Alinta shares. |
| Article Location(s) |
Simple Fund: Corporate Actions
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| Article Addition Added |
31/01/07 |
| Article Last Updated |
30/06/08 |
| Software Version |
Simple Fund 10.1 or earlier |
Article Details |
This article assists users with funds which held AGL shares on 25 Oct 2006 that were exchanged for New Alinta shares and AGL Energy shares
For ATO guideline on the merger of AGL and Alinta Ltd please click here
BGL do not provide accounting advice. Please consult your tax advisor for accounting or taxation advice.
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Article Solution |
Assumptions:
- you owned ordinary shares in AGL that were exchanged for New Alinta ordinary and New Alinta converting shares, and
- your New Alinta converting shares were bought-back in exchange for ordinary shares in AGL Energy.
- you have chosen scrip for scrip rollover for all your post-CGT AGL shares.
Please also note:
You will not be eligible to choose scrip for scrip rollover (and cannot use this article) for any of your AGL post-CGT shares with a cost base of $19.25 or more.
Instructions to record the merger in Simple Fund
The example below assumes that 1000 AGL Ordinary Shares are held at a cost of $1.10.
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METHOD 1
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Step 1 - Rename your existing Australian Gas Light (AGL) shares to AGL Energy.
From the Chart of Accounts, highlight the 776/00X account for AGL. Click  Edit and change the Account Name.
For all purposes, including the CGT discount, the acquisition date of your AGL Energy shares is the date of the merger transaction (25 October 2006).
To achieve this, you will need to enter the following adjustment journal at 25/10/2006:
DR or CR 776/00X AGL Energy, 1000 units, $0.00
Then edit your original purchase transaction for the AGL Shares and input 25/10/2006 into the CGT Date field. Ensure that you have changed the financial year in the Fund Details screen back so that this transaction can be edited and saved.
Alternatively, create a new account for AGL Energy rather than renaming the AGL Shares and:
1. Process a disposal on the 25/10/2006 of all the AGL Shares at cost price (Simple Fund will credit the AGL Shares account and debit the 491 clearing account); and
2. Input a new purchase transaction at 25/10/2006 for the AGL Energy shares by crediting account 491 and debiting the 776/00X AGL Energy account. This will clear out the 491 account to zero.
Step 2 - Record a Return of Capital on the AGL Energy shares
The cost base reduction is calculated as:
Cost base of original AGL shares X 27.97%
i.e. 1000 x $1.10 x 0.2797 = $307.67
From the Transactions Search screen, click  Additional Functions and select Return of capital.
Input the transaction date as 25/10/2006 and input the amount.
Click  Accept
Step 3 - Record a new purchase for Alinta Ordinary Shares
From the Chart of Accounts, create a new account for Alinta Ordinary Shares.
From the Transactions Search screen, double-click the debit entry on 25/10/2006 to the 998 Data Upload clearing account, which was posted as part of the return of capital in Step 2.
Change the account code to the new account code for Alinta Ordinary Shares.
Input the number of units as
Number of AGL ordinary shares X 0.5775 (rounded)
i.e. = 1000 x 0.5775
= 577.5
= 578
Note: If you choose a script for script rollover for all your post CGT AGL shares, and you wish to maintain the original acquisition date of the AGL shares as the CGT date for the New Alinta Shares, you will need to:
1. In step 3 above, enter the CGT date in the transaction; and
2. Enter a dummy non-cash journal entry to the New Alinta account with the same quantity (as per example above, this would be 578) and zero amount.
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METHOD 2
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Part A
Record the New Alinta Ordinary Shares
- Calculate the new number of Alinta Ordinary Shares issued.
New Alinta Ordinary Shares = Number of AGL ordinary shares X 0.5775
= 1000 x 0.5775
= 577.5
- Round up the shares to the nearest whole number i.e. 578 (Result A)
- In Simple Fund, consolidate AGL ordinary shares to Result A above. You can do this by going into the Transactions screen and clicking on Additional Functions| Transaction Type| Consolidation i.e. put 578 as the ‘new number of units’
- Rename the AGL Ordinary Investment account to New Alinta Ordinary Investment in the Chart of Accounts
Part B
Calculate the cost base of New Alinta Ordinary Shares
- Cost base of New Alinta Ord Shares =
Old cost base of AGL Ord Shares X 27.97%
i.e. 1000 x $1.10 x 0.2797 = $307.67
(If its Pre-CGT use the cost base as $10.36 per share as determined by the ATO tax ruling).
- Do a Return of Capital to record the change in cost base. You can do this by going into the Transactions screen and clicking on Additional Functions| Transaction Type| Return of Capital i.e. Input Return of Capital amount as $792.33. Please note this will put the return of capital amount into the 998 clearing account. You will need to clear out this account using the instructions in Part C below.
Part C
Record the Purchase of AGL Energy Ordinary Shares
- The number of units for AGL Energy Ordinary Shares will remain the same as the number of units for AGL Ordinary Shares initially held. (i.e. 1000 x 1 = 1000 shares)
- Calculate the cost base of AGL Energy Ordinary Shares
Cost base of AGL Energy Ordinary Shares =
Old cost base for AGL Ord Shares X 72.03%
i.e. 1000 x $1.10 x 0.7203 = $792.33
(If its Pre-CGT use the cost base as $15.40 per share as determined by the ATO tax ruling).
- Record the purchase through the Transactions screen using non cash journals. 1000 shares purchased for $792.33. The other side of the entry would be a credit to the 998 account which would clear the balance in this account from Part B.
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PRE CGT ASSET
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Edit the existing AGL account in the Chart of Accounts. Uncheck the box 'subject to CGT'. Now you can process a disposal with any capital gain being treated as non-taxable.
Record two new purchases for Alinta and AGL. Page 5 of the ATO Guide specifies the cost base as $10.36 for Alinta, and $15.40 for AGL Energy at 25/10/2006.
Record a disposal for your existing AGL shares with the consideration being the same amount as your new cost base.
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