There is no exit charge in the distributing company. If you own less than 800 Woolworths shares (meaning that you will end up with a parcel of less than 800 Endeavour shares), you can elect to have these shares sold through a share sale facility. But I am baffled. [Content_Types].xml ( n0D']Psrl$} [8gDAh/L/+Y5a8vz)pJf@v1a vX&s XG+B.dKTVW0O&kzu+."Qr |$]a 6 *DMx)Q`vQU42FD!)Q()=ZAq'b),M._euXkPYnbld#m|YHG/IY L86}FDPbtkP$G]>PWhwWCKXK0U[7 & pOk#/mtv0eBtG8k4,DN6Kzs[7{ PK ! If subtracting $0.14598558 results in a negative amount, the cost base of each Woolworths share becomes nil and the excess is a capital gain. It takes a while for buyers to recognise the value, and as the management team starts to perform, the share price rises. A demerger, as defined in section 125-70, happened to the Woolworths demerger group, which included Woolworths and Endeavour. . Neville has to work out the capital gain on the separate unit in SCA Property Retail Trust and SCA Property Management Trust that made up each stapled security. Here's what A calculator at the ATO website helps shareholders work out the capital gains tax consequences under a demerger, including the BHP Billiton, CSR, Sonic Healthcare, Mincor and WMC demergers. . of the predecessor company vest into successor company. The Act provides that deduction of one-fifth of the expenditure incurred wholly and exclusively for the purpose of demerger is allowed to an assessee (being an Indian company) in each of the five successive years, beginning from the year in which the demerger takes place [47] . My bet: four weeks after the listing, Endeavour will be lower in price than where it first trades on the ASX, and 12 months later, higher in price. 3. Section 47(vicc) read with Explanation 5 to Section 9(1)(i) of the Act. Section 2 (19AA) of the Income Tax Act,1961 defines demerger as a transfer of undertakings (one or more) to any resulting organisation pursuant to an arrangement scheme under Sections 391 to 394 of the Companies Act, 1956 in such a way that:. Furthermore, in absence of any specific restriction (like section 115BAA, 115BAB etc.) If you subsequently sell your Endeavour shares, then you may have to pay capital gains tax.One thing that will change is your cost base for your Woolworths shares. The cost base of your shares will depend on the way you acquired them. The capital return amount was $0.7299279 for every five Woolworths shares you owned on 30November 2012. Endeavour Group intends to follow Woolworths Group's established dividend policy, which is initially expected to deliver a payout ratio of 70% to 75% of profit after tax. However, another reading of the Memorandum also appears to imply that the depreciation on goodwill arising out of tax neutral business reorganisations in any case was always impermissible. As the dividend is fully franked it has franking credits attached to it. You apportion your pre-demerger WOW cost base 85.81% to your post-demerger WOW shares and 14.19% to your EDV. Yes, for tax purposes your new EDV shares have the same acquisition dates as your WOW shares. Since the law has now been amended retroactively, it can be contended that given the depreciation rate on intangibles was the same, there was never a need to bifurcate goodwill into other intangible components at that point of time and therefore all intangibles were clubbed under a common head called Goodwill. Some were via DRP, and some were bought outright via broker. By rejecting non-essential cookies, Reddit may still use certain cookies to ensure the proper functionality of our platform. if(MSFPhover) { MSFPnav5n=MSFPpreload("../_derived/back_cmp_Profile110_back.gif"); MSFPnav5h=MSFPpreload("../_derived/back_cmp_Profile110_back_a.gif"); } OVERVIEW OF THE DEMERGER. The Company, following confirmation from the ATO, advises that the approved apportionment is 75% for Woolworths and 25% for Endeavour. 14.19% of the total cost bases of your Woolworths Group shares just before the demerger to your corresponding Endeavour Group shares. (iii) Cost of acquisitionand period of holding of capital asset. It can be accessed here. Paul has more than 30 years experience in financial services and banking, including 20 years with the Commonwealth Bank Group in senior leadership roles. Example Own 1000 WOW as of the Scheme date - received 1000 EDV Shares from the demerger. Example If WOW cost base as of the Scheme date is $32,050, Cost Base reduction is $4,547.895. 77 of 2021 has inserted Rule 8AC for computation of STCG and WDV. release of all or any assets by the company; debentures, debenture stock or deposit certificate (with or without interest) or distribution of bonus to preference shareholders; loan or advance given by closely held company to a shareholder having shareholding 10% or above or to a concern in which such shareholder holds substantial interest (exceeding 20% of shareholding) or any payment by such company on behalf of or for the individual benefit of such shareholder. A reason to vote against the demerger are the costs, although many have already been occurred. They are paying this out of profit which has already suffered company tax which is 30% of the profit. The Explanatory Memorandum appears to give the impression that depreciation claim for the past years should be allowed basis the SC decision in CIT v. Smifs Securities Ltd [2012] 348 ITR 302 (SC). Read the tax part of the demerger booklet? Suppose you purchased your original Woolworths shares for $30.00 each. You will deemed to have purchased your Endeavour shares on the same date that you acquired your original Woolworths shares. The company that transfers such business operation is known as the "demerged" company, while the company to which the business is transferred is known as the "resulting . This information was produced by Switzer Financial Group Pty Ltd (ABN 24 112 294 649), which is an Australian Financial Services Licensee (Licence No. Have, If you think about the biggest obstacle to healthy eating, it usually comes down to time. Benefit of exemption is available to shareholders of the demerged company only when consideration is received in the form of shares of the resulting company. If two or more organizations. Availability of MAT [65] [65]credit of transferor company. General Anti Avoidance Rules (GAAR) [70] introduced w.e.f. 24 June 2021. Another condition is that the assets/properties of the undertaking are transferred to the resulting company at values appearing in the books of demerged company immediately before the demerger. The controversy as to whether Goodwill of a business is an intangible asset eligible for depreciation was settled by the Honble Supreme Court (SC) in the case of Smifs Securities Ltd. At the capital gains label on his tax return (supplementary section) Neville answers that he had a capital gains tax event during the year and writes 39 in the Net capital gain and Total current year capital gains fields. Sixth proviso to Section 32(1) of the Act. (iv) Carry forward of accumulated losses and unabsorbed depreciation. Neville decided he wanted the stapled securities sold so he did nothing. Woolworths have merged their drinks businesses - Dans, BWS - with their hospitality business - ALH - to form Endeavour Group. MAT credit is available as a credit for succeeding 15 years for set-off against the excess of normal tax over MAT. An issue that may ariseis whether such reduction of reserves results in deemed dividend implications under Section 2(22) of the Act especially if the resulting company is a shareholder of the demerged company. Assuming 148 is correct: Woolworths are paying a cash dividend of $0.62 per share = $91.76. Refer to Step 3 in Example 1 if your stapled securities were sold in the sale facility. Demerger- Tax Implication on Individual. Deducting the dividend amount from the capital gain prevents this. You may also have been allotted SCA Property Group stapled securities by participating in the Woolworths retail shareholders offer. Neville still owns all of his 1,000 Woolworths shares. However, the $4.76 decline in its share price was more than offset by the $6. If you acquired your shares under an employee share scheme (ESS), this information only applies to you if the shares have been taxed under the ESS rules. Explanation 7 to Section 43(1) of the Act and Section 49(1)(iii)(e) of the Act. // -->