On 23 December 2003, AMP Ltd demerged its UK operations by transferring shares in HHG PLC to shareholders.
The following things happened under the AMP Demerger:
* To return to the AMP Demerger calculator, press the BACK button of your browser
The Pre-listing purchase through the Facility was offered to shareholders who received shares under the Demutualisation of AMP giving them the option of acquiring 52 additional AMP Shares for $989.42 (or $19.03 per share).
* To return to the AMP Demerger calculator, press the BACK button of your browser
Under the AMP Rights Offer, shareholders received one right for each AMP Share owned on 28 October 2003, 5:00pm (EST time).
Shareholders who received rights were able to:
Example:
Betty had 1,000 AMP Shares on 28 October 2003. Betty was able to exercise the rights
by paying $770 (1,000 x $0.77) to receive 198 new AMP Shares ($770 ÷ $3.87) or not exercise
the rights and receive a payment of $82.00 (1,000 rights x $0.082).
If you exercised your rights, the calculator will work out the new cost base of each of your shares (total amount you paid ÷ number of new AMP Shares you received) and include them in a cost base report for your AMP Shares.
If you did not exercise your rights, the receipt is a capital gain as you did not pay anything for the rights. The capital gain must be taken into account in your 2004 tax return.
You are taken to have acquired the rights when you acquired the AMP Shares that gave rise to your rights (’rights acquisition time’). Therefore some of your rights may have been acquired at least 12 months before you made the capital gain on the payment (which was on 9 December 2003), and you may be entitled to use the discount method when calculating that capital gain. The calculator will tell you how much of the capital gain is eligible to be worked out using the discount method.
You were able to subscribe for all of your entitlement, part of your entitlement, or none of your entitlement. If you subscribed for part of your entitlement, the calculator cannot correctly work out the tax outcome for the refund you received and the number of shares you own just after the Demerger. You will have to do a manual calculation.
The manual calculation involves:
number of rights exercised x $0.77 (rounded down to a whole number)
$3.87
number of rights exercised x $0.77
* To return to the AMP Demerger calculator, press the BACK button of your browser
Under the Demerger, AMP cancelled 29.1947766% of your shares. This meant that those shares ceased to exist (your remaining shares were then split so that you ended up with the same number of AMP Shares as you started with, however the ‘split’ shares are different shares to the cancelled ones).
Although the cancellation has already happened you now need to choose which of your original shares were the ones that were cancelled in order to work out your tax consequences. Note that if you have only one parcel of shares you do not need to make this choice as it will not affect your tax outcome.
Some options for making the choice include:
To work out what is best for your circumstances, you can compare the tax outcomes by changing your choices of which shares to cancel. When you get to the end of this calculator, you will be asked if you want to test the outcome of cancelling different shares or exit the calculator.
* To return to the AMP Demerger calculator, press the BACK button of your browser
You will make a capital gain or a capital loss on the:
Broadly, a capital gain arises when you receive more for the cancellation or sale of your shares than its cost, and a capital loss arises when you receive less than the shares’ cost (this is further explained below).
All of your capital gain or capital loss amounts must be taken into account when you complete your tax return.
There are three methods of calculating your capital gain under the AMP Demerger. These are:
Not all methods are available in every circumstance. The calculator will tell you when you are not eligible to use a method for your capital gains amounts.
This table gives you a description of the three methods and when to use the method (for more information, see the Guide to capital gains tax (NAT 4151).
|
|
Indexation method |
Discount method |
‘Other’ method |
|
Description of method |
allows you to increase the cost base by applying an indexation factor based on CPI up to September 1999 |
allows you to discount the gain calculated under the ‘other method’ |
basic method of subtracting the cost base from the capital proceeds |
|
When to use the method |
use for AMP Shares purchased before 11.45am (by legal time in the ACT) on 21 September 1999 and only if it produces a better result than the discount method. |
use for AMP Shares owned for 12 months or more or rights under the AMP Rights Offer taken to have been owned for 12 months or more if it produces a better result than the indexation method. |
use when the indexation and discount methods do not apply (for example, if you bought your AMP Shares within 12 months of the Demerger). |
Your capital loss is worked out by subtracting the capital proceeds from the reduced cost base of the shares.
Example:
One of your AMP Shares that you received under the Demutualisation (it has a
reduced cost base of $10.43) was cancelled. You received capital proceeds of
approximately $5.91 for the cancellation, which means you had a capital loss
of $4.52 for that share.
The cost base of your shares is the amount you use to work out your capital gains (if any) when you sell your shares, or when some other CGT event happens to your shares (for example, they are cancelled).
The reduced cost base of your shares is the amount you use to work out your capital losses (if any) when you sell your shares.
For most people, there will be no difference between the cost base and reduced cost base of their shares. Therefore, most people will be able to use the cost base from the ‘Cost base reports’ produced by this calculator to work out whether they have a capital gain or capital loss if they later sell those shares. For more information, see the Guide to capital gains tax (NAT 4151).
It is possible that the cost base of your shares may change after the Demerger, for example, if you incur additional expenditure on the shares.
The following steps are used to work out the cost base of each of the AMP Shares you own immediately after the Demerger:
| number of shares cancelled in that parcel | ||
| purchase cost of the parcel | X | |
| number of shares in that parcel before cancellation |
Example: Nick had a parcel of 1,000 AMP Shares received under the Demutualisation of AMP Ltd. 291.9 of those shares were cancelled under the Demerger and he had 708.1 AMP Shares after the cancellation. He works out the cost base of those shares after the Demerger as follows:
The cost base of the shares you subscribed for under the AMP Rights Offer is the subscription amount you paid divided by the number of shares you were allocated.
This number may be slightly different from the $3.87 shown on the allotment notice sent to you by AMP. The difference is because AMP rounded your entitlement down to the nearest whole number and donated any left-over subscription monies to charity.
The cost base of the HHG Shares you acquired under the Demerger is worked out by:
Example:
Nick had a parcel of 1,000 AMP Shares received under the Demutualisation of AMP Ltd. 291.9
of those shares were cancelled under the Demerger and he had a cancellation entitlement
of $1,726.36. He received 1,000 new shares in HHG. He works out the cost base of his HHG
shares after the Demerger as follows:
* To return to the AMP Demerger calculator, press the BACK button of your browser
On 20 November 1997, the Australian Mutual Provident Society (AMP) demutualised and became AMP Limited.
Policy holders received AMP Shares with a purchase cost of $10.43 each. If you received shares under the demutualisation you could also acquire a further 52 shares for a total cost of $989.42 ($19.03 per share).
|
Transaction |
Date of purchase |
Purchase cost per share |
|
received as a policy holder on the Demutualisation |
20 November 1997 |
$10.43 |
|
additional shares that could be subscribed for under the Pre-listing purchase through the Facility |
22 June 1998 |
$19.03 |
* To return to the AMP Demerger calculator, press the BACK button of your browser
The Dividend Reinvestment Plan (DRP) allowed shareholders to choose to reinvest their dividends in acquiring additional AMP Shares.
The purchase costs of the AMP Shares acquired under the DRP are as follows:
|
Date |
Purchase cost per share |
|
28 October 1999 |
$14.80 |
|
11 April 2000 |
$16.60 |
|
25 October 2000 |
$16.70 |
|
20 April 2001 |
$20.10 |
|
30 October 2001 |
$17.80 |
|
23 April 2002 |
$18.90 |
|
29 October 2002 |
$11.40 |
|
28 April 2003 |
$5.50 |
|
28 October 2003 |
$6.80 |
* To return to the AMP Demerger calculator, press the BACK button of your browser
The calculator uses information on the type of entity you are to determine whether you are entitled to use the discount method when calculating any capital gain you make on the cancellation of your AMP Share or on any payment you receive under the AMP Rights Offer.
Companies are not eligible to use the discount method although a life insurance company with virtual PST assets may be entitled to use the discount method for some assets.
If you are entitled to use the discount method, it allows you to reduce your capital gain by:
* To return to the AMP Demerger calculator, press the BACK button of your browser
Immediately after the cancellation of your AMP Shares under the Demerger, your remaining AMP Shares were split. When the number of shares in each parcel is multiplied by the share split number (of 1.4123) it may result in some or all of your parcels having a fraction of a share included in it.
For example, if one of your parcels had 100 shares (after the cancellation), it had 141.23 shares (after the split).
The calculator takes all the fractional interests from the relevant parcels and adds them together to form whole shares. Those whole shares are then attached to the parcel of shares that has the highest number of shares in it (after any cancellation under the Demerger).
For example, if you had one parcel with 200 shares and another with 100 shares, the fractional entitlement share will be attached to the parcel with 200 shares.
The cost bases of the parcels are also adjusted to reflect the shift of these fractional interests.
Note: If you wish to attach your fractional interest to a different parcel, you will have to do a manual calculation.
* To return to the AMP Demerger calculator, press the BACK button of your browser
Your interests in HHG PLC are technically CHESS depository interests. However these are treated as shares for CGT purposes so we refer to them as HHG Shares in this calculator.
* To return to the AMP Demerger calculator, press the BACK button of your browser
HHG PLC established a Sale Facility that will be open for a limited period until 30 June 2004.
Shareholders who received 1,000 or fewer HHG Shares under the Demerger were entitled to sell all (but not part) of the HHG Shares they received through this Sale Facility. Shareholders did not have to pay to use this service.
* To return to the AMP Demerger calculator, press the BACK button of your browser
The Institutional Bookbuild was conducted on 16 - 17 December 2003. It was the process by which the Rights under the AMP Rights Offer that were not taken up by eligible AMP shareholders or were unable to be taken up by Ineligible AMP shareholders (for example, a non resident of Australia), were offered to institutions and other eligible investors.
If you acquired shares under this mechanism, you cannot use the calculator as it cannot work out the cost base of your new AMP Shares.
* To return to the AMP Demerger calculator, press the BACK button of your browser
The calculator applies your capital losses against your capital gains as shown in the ‘Capital gain or capital loss report’ to work out your net capital gain or net capital loss. The result is shown at either Label A (Net capital gain) or Label V (Net capital losses carried forward to later income years) for question 17 of the 2004 tax return (supplementary section) for individuals or question 9 of the 2004 tax return for retirees.
In calculating the net capital gain or the net capital loss to carry forward, it may be necessary to make choices about:
The calculator applies capital losses in the following order:
The net capital gain is the sum of each assets net capital gain remaining after applying the capital losses. It is the sum of:
The postings to the tax return are:
* To return to the AMP Demerger calculator, press the BACK button of your browser
When you calculate your net capital gain, you may be able to choose to use the discount method or indexation method for some or all of your cancelled AMP Shares.
In working out your net capital gain for the purposes of filling out your tax return, the calculator uses a method that usually provides the highest net capital loss or lowest net capital gain. The method used is described at ‘Method of calculating your net capital gain or net capital loss (Individuals only)’.
* To return to the AMP Demerger calculator, press the BACK button of your browser
A parcel of shares represents the shares that you purchase in AMP on a particular date for the same price.
For example, shares you receive under each of the following transactions will form one or more separate parcels:
You may own AMP Shares under multiple HINs in your own name. This may have arisen where you had more than one insurance policy in AMP at the time of Demutualisation but under slightly different names (for example, James Smith and Jamie Smith). In this case you may have received shares for each policy under separate HINs.
If you own your AMP Shares under more than one HIN, you can group your shareholdings for the purposes of the calculator.
Example:
James had two insurance policies upon the Demutualisation of AMP in 20 November 1997.
Upon demutualisation, James received AMP Shares under two HINs. James participated
in the Dividend Reinvestment Plan (DRP). James can group his AMP Shares from his
two HINs (for Demutualisation shares and shares received under the DRP for each
dividend distribution).
If you own your AMP Shares jointly or in partnership with other people, you should use the calculator only for your interest in the AMP shares. For example if you are an equal partner with one other person – you should use the calculator for only half of the AMP shares held by the partnership.
* To return to the AMP Demerger calculator, press the BACK button of your browser
Where we use the word 'purchase' in this calculator, it is taken to include any means by which you acquire shares, including under the following:
* To return to the AMP Demerger calculator, press the BACK button of your browser
The purchase cost each of your parcel/s of shares is the amount that you paid for each of the parcel/s.
Note: you do not include indexation of the purchase cost here – the calculator will work that out if it is relevant for your cancelled shares.
The calculator automatically works out the purchase cost for parcels of shares you acquired under the:
However, you may also have additional costs that may be included in the purchase cost of one or more of your parcel/s. The following explains what some of those costs might be and how to treat them for the purposes of the calculator.
The purchase cost of your parcels of shares should include any brokerage and stamp duty you have paid for that parcel (these costs did not arise under the Demutualisation, Pre-listing purchase through the Facility, Dividend Reinvestment Plan and the Share Purchase Plans, but was common if you purchased shares through the Stock Exchange).
Although unusual, you may also have other amounts that you can include in the cost of your shares (for example, professional advice fees that relates to a parcel of shares).
Some associated costs of purchasing your shares cannot be added to the purchase cost, including:
If you are unsure whether an amount can be included in your purchase cost, see ‘What is the cost base?’ in chapter 1 of the Guide to Capital Gain Tax (NAT 4151), contact the ATO or contact your tax advisor.
If the additional costs relate to an ‘other’ purchase (see definition of purchase), you add the additional costs to the amount you paid for the particular parcel and enter this figure as your total purchase cost of the parcel.
If the additional costs relate to shares you purchased under the Demutualisation, Dividend Reinvestment Plan or a Share Purchase Plan:
* To return to the AMP Demerger calculator, press the BACK button of your browser
On the cost base reports, we do not provide an exact purchase date for AMP Shares you purchased under the AMP Rights Offer.
Shares you purchased under the AMP Rights Offer were purchased on the date you exercised the rights (that is, the date you sent your acceptance form and cheque). This could have been any date between 7 November 2003 and 9 December 2003.
If the date we have shown on your cost base report for this parcel of shares is incorrect, you should cross it out and hand write in the correct date.
* To return to the AMP Demerger calculator, press the BACK button of your browser
AMP shareholders were given the option of participating in Share Purchase Plans (SPP). If you participated in a SPP, you had to purchase a set number of shares. For example, if you participated in the June 1999 SPP, you had to purchase 30, 60 or 85 AMP Shares.
The table below provides a list of the SPPs that AMP shareholders could have participated in – it shows both the number of shares you could purchase and the purchase cost of that parcel.
Shares you purchased under the SPPs were purchased on the date of acceptance of the offer from AMP (that is, the date you sent your acceptance form and cheque).
|
Date on AMP sheet |
Acquisition date * |
Number of shares in parcel ($A cost base of parcel) |
|
15 June 1999 |
1/5/99–28/5/99 |
30 ($522), 60 ($1,044) or 85 ($1,479) |
|
19 May 2000 |
11/4/00–5/5/00 |
30 ($498), 60 ($996) or 90 ($1,494) |
|
30 November 2000 |
25/10/00–15/11/00 |
30 ($501), 60 ($1,002) or 85 ($1,419.50) |
|
29 June 2001 |
20/4/01–11/5/01 |
25 ($502.50), 50 ($1,005) or 74 ($1,487.40) |
|
28 December 2001 |
5/11/01–14/12/01 |
30 ($534), 60 ($1,068) or 84 ($1,495.20) |
|
28 June 2002 |
29/4/02–7/6/02 |
27 ($510.30), 53 ($1,001.70) or 79 (1,493.10) |
|
18 July 2003 |
22/5/03–13/6/03 |
103 ($500), 207 ($1,000), 414 ($2,000), 622 ($3,000), 829 ($4,000) or 1,037 ($5,000) |
* The dates we have shown in this table are the date you were allocated the SPP shares. However, for tax purposes, the correct date is the date you accepted the offer. Those dates are likely to have been some weeks or days prior to the date shown on the AMP sheet. Except, for the last SPP, the exact date will make no difference to your tax outcomes. For the last SPP, it could have been any date between 22 May 2003 and 13 June 2003. You may need to hand write this date into your cost base report.
* To return to the AMP Demerger calculator, press the BACK button of your browser.