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Article 480: Publishing and Broadcasting Limited restructure (2007) |
| Article Description |
Publishing and Broadcasting Limited restructure (2007) |
| Article Location(s) |
Simple Fund: Corporate Actions
Simple Fund: General
|
| Article Addition Added |
11/11/08 |
| Article Last Updated |
18/12/08 |
| Software Version |
Simple Fund - Any Version |
Article Details |
The following sources should be consulted before you post any transactions:
References: CR2007/11
http://law.ato.gov.au/atolaw/view.htm?Docid=CLR/CR2007111/NAT/ATO/00001&PiT=99991231235958
ATO CGT consequences
http://www.ato.gov.au/print.asp?doc=/content/00140423.htm
Between 10 December and 12 December 2007, Publishing and Broadcasting Limited (PBL) undertook a restructure where:
• PBL was acquired by Crown, and
• The media group now known as Consolidated Media Holdings (CMH) was demerged from Crown.
Under the first part of the restructure, as a PBL shareholder you disposed of your PBL shares to Crown and in exchange you elected to receive one of three consideration options:
Standard
Maximum Cash
Maximum Share
The ATO has produced two worksheets to help taxpayers who participated in the restructure prepare their income tax return and update their capital gains tax (CGT) records:
PBL Restructure 2007: Choosing Rollover
PBL Restructure 2007:Not Choosing Rollover
You may have to use both worksheets, for example, if you have made a capital gain on some of your shares and a capital loss on others.
Two capital gains tax (CGT) events occurred during the restructure. They were:
1. disposal of your PBL shares, and
2. A share capital reduction on your Crown Ltd (Crown) shares, which occurred when you received your Consolidated Media Holdings Ltd (CMH) shares.
The ATO website will help you work out the tax consequences of these events, including your:
• Capital gain or capital loss when you disposed of your PBL shares
• CGT cost baserecords for the Crown shares you received
• CGT cost base records for the CMH shares you received. |
Article Solution |
The following example shows how to record the transactions in Simple Fund for the restructure following the guidelines shown in the ATO worksheets.
STEP 1: Confirm the full details of all parcels the fund holds at restructure date.
This involves confirming the purchase date, number of units and cost base for each parcel. You will need to then confirm which election method applies and whether or not rollover relief is being applied.
EG. Fund purchased parcel of 1000 units in PBL at 14/12/2002 for $8,700. Rollover relief is being used and the fund has elected for the Standard option.
STEP 2: Complete the appropriate ATO Worksheet
Complete the appropriate ATO worksheet and calculate the capital gain and new shares and cost bases in Crown and CMH.
Click below for the appropriate worksheet:
PBL Restructure 2007: Choosing Rollover
PBL Restructure 2007:Not Choosing Rollover
STEP 3: Record the cash component received to account 491
EG.
Dr Bank $ 3000
Cr Account 491 $3000
Step 4: Record Return of Capital
Record a Return of capital for relevant proportion of cost base amount calculated in the worksheet on the 10/12/2007. Please Note: This step is not needed if rollover relief is not being used.
EG.
This will post a credit entry against each parcel and a balancing debit entries to 998. The transactions posted to account 998 need to be changed to account 491.
Step 5: Dispose of Shares in PBL
Record a disposal for PBL shares on the 10/12/2007 in the disposal screen. The consideration used will be equal to the Original Cost base less the Return of Capital amount plus Total Capital Gain amount calculated on ATO Worksheet.
EG. Record Disposal on 10/12/2007 for $9,164.82. Simple Fund will calculate a Capital Gain of $1732.41.
Step 6: Record the acquisition of the Crown Shares
You will need to create a new Investment account for Crown if one does not already exist.
Rollover Relief
For the purposes of scrip-for-scrip rollover and the 12-month rule you are taken to have acquired your Crown shares on the date you acquired your original PBL shares. For each parcel in Crown on the worksheet you will need to record
A Debit entry to 776/xxx with the new units and no amount
A Debit entry 776/xxx with the new units, the amount of the new cost base and a CGT Date of the original purchase date
A credit entry equal to the amount of the new cost base posted to account 491.
EG.
The following journals would need to be posted.
No Rollover Relief
You will need to record a new purchase on the 10/12/2007 with the units and cost base calculated in the worksheet. The other side of the entries will need to be posted to account 491.
Step 7: Record the acquisition of the CMH Shares
You will need to create a new Investment account for CMH if one does not already exist.
On the 12/12/2007 record the new purchase for each parcel in CMH. Place the same amount as the cost base as a credit journal to account 491.
EG.
Dr 12/12/2007 776/xxx 1000 units $3,700
CR 12/12/2007 account 491 ($,3700)
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