woolworths demerger tax implications

The disadvantages? I'm trying to track the performance of my WOW and new EDV shares, partially to help with capital gains tax etc etc. The amendments enacted vide FA 2021 are listed below: These amendmentsare applicable from AY 2021-22 onwards i.e., no depreciation shall be available on Goodwill forming part of the block of assets as on 1 April 2020. You are entitled to a franking tax offset equal to the franking credit amount. Under the 'Securities Held' section, find the row Woolworths Group Limited . Woolworths Endeavour Demerger. PK ! The ATO is expected to publish the ruling in early August 2021. one unit in Shopping Centres Australasia Property Retail Trust (SCA Property Retail Trust). Suppose you purchased your original Woolworths shares for $30.00 each. 5 - 'Demerger . Australian Taxation Office for the Commonwealth of Australia. Assuming that tax demerger relief is obtained, there shouldn't be any tax implications for Australian resident shareholders from the demerger per se. Make sure you have the information for the right year before making decisions based on that information. Shareholders will be asked to approve the demerger via a resolution at a general meeting on Friday 18 June. The Scheme Record Date is on 25 June 2021. Sixth proviso to Section 32(1) of the Act. It may be noted that the Delhi Tribunal in NIIT technologies [48] has taken a view that deduction for expenses incurred on demerger is not allowable to the resulting company but is allowed only to the demerged company. The demerger relief rules are intended to allow relevant investors optional Capital Gains Tax (CGT) rollover relief and provide dividend exemptions. Some examples are: Incidental costs such as brokerage are included in the cost base. . No capital gains tax arises to the shareholders as any gains are rolled over. 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. Simply the best portfolio management tool for DIY investors. As per Section 72A(7)(aa) of the Act, the term industrial undertaking" means any undertaking which is engaged in(i) themanufacture or processing of goods; or (ii) the manufacture of computer software; or (iii) the business of generation or distribution of electricity or any other form of power; or (iv) the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services; or (v) mining; or (vi) the construction of ships, aircrafts or rail systems. The shareholders of the transferor company (except when transferee company itself is a shareholder) receive shares of the transferee company in consideration of such transfer; and. The amendment in section 43(6) requires the assessee to exclude the standalone WDV of goodwill (calculated as difference between actual cost of goodwill and depreciation allowable on such goodwill till 31 March 2020) from the block of intangibles. Say you did the calculation and found out the numbers.But you bought shares in both . Refer to Example 2 if you sold your Woolworths shares before 11December 2012. Explanation 1(i)(c) to Section 2(42A) of the Act. 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. Using the ruling apportionment (point 16 in the ruling) results in Cost base of EDV shares as 10000* 14.19% = $1419. A free Sharesight account will track this for you https://help.sharesight.com/au/how-to-handle-woolworths-and-endeavour-demerger/. Furthermore, in absence of any specific restriction (like section 115BAA, 115BAB etc.) Did that figure exclude Bruce Mathieson's 25% stake and all state government . Click on the 'Portfolio' tab and then click on the appropriate under 'My Portfolio(s)', which includes the WOW shares. - SMH.com.au 4002 702 0903 'Never a dull moment', Fund Manager looks at implications . You have the same number of parcels of EDV as you do WOW each with their own acquisition dates and costbases as per 1 & 2 above. The SC in K.H. In this case as no shares are issued, the applicability of the Section fails, and the original cost remains protected in the hands of the shareholders of the demerged subsidiary company. C.Historic Purchase Price Allocation (PPA) - Need and ability to revisit? By comparison, Woolworths has seen its share price rise, if only slightly since 24 June, with the stock up about 1.6% in that period. CIT v.Smifs Securities Ltd.(SC)348 ITR 302. The Act [69] with effect from 1 April 2018 has been amended to widen the scope of the term accumulated profits, which provides that in the hands of the amalgamated company, accumulated profits or loss shall be increased by the accumulated profits of the amalgamating company, whether capitalized or not, on the date of amalgamation. Further, the Finance Act, 2021 has also made an amendment to section 55(2)(a) of the Act in relation to determination of cost of acquisition of certain intangible assets, including goodwill. If you owned Woolworths shares on 30 November 2012 but sold them before 11December 2012, follow the instructions under Shares sold before 11December 2012. However, significant amendments have been enacted by the Finance Act, 2021 (FA 2021) in this regard. The stapled securities were sold for $1.6347 each and the sale proceeds sent to you. You must include your dividend amount, and the franking credit attached to it, at the Dividends label in your 201213 tax return. Explanation 2A to Section 2(22) of the Act, Circular No. With net debt of $1.3bn, this gives a market capitalisation of $13.7bn, equivalent to a share price of $10.80. A question that arises is whether similar treatment would apply in the case of MAT credit. But if Endeavour trades like previous demerged companies and comes under selling pressure at the outset, I would wait a few weeks until I bought. E. Under Section 50-B, capital gains arising from slump sales are chargeable to tax. Given the same, matters which have already been adjudicated or pending for adjudication (pertaining to years prior to AY 2021-22) should arguably not get impacted by this amendment. Depreciation claim for past years Whether impacted? This condition requires issuance of shares. Another way to value the parts is to consider the whole. For my holdings of EDV and WOW, what is the cost base? Unlike Woolworths . You cannot reduce the cost base below nil. The main concerns are likely to be: Invocation of GAAR may lead to wide ramifications including denial of treaty benefits.A plausible issue is on applicability of GAAR provisions to a transaction of merger / demerger. General Anti Avoidance Rules (GAAR) [70] introduced w.e.f. Question 1. Expand Company Description. When you sold your Woolworths shares, this right remained as a separate capital gains tax asset. CIT v. T Veerabhadra Rao, K Koteswara Rao & Co. (1985) 155 ITR 152 (SC). if(MSFPhover) { MSFPnav7n=MSFPpreload("../_derived/up_cmp_Profile110_up.gif"); MSFPnav7h=MSFPpreload("../_derived/up_cmp_Profile110_up_a.gif"); } // -->