Private ruling: Capital gains tax - cost base of XX shares
Published: April 2012
Ruling period: Year ended 30 June 2011
Date scheme commenced: 1 July 2010

Ruling: Q1: Do you apportion your bonus shares acquired before and after 20 September 1985? | A1: 

Relevant facts and circumstances: This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling. Prior to 20 September 1985, you acquired shares in XX. From late 1985 to late 1992 you have received bonus shares and you have also purchased a number of bundles of shares in XX. No part of the bonus shares was a dividend or treated as a dividend. The bonus shares were all fully paid. In 1995, a capital reconstruction occurred in the Group which issued you three shares in place of every five shares you previously held. You held a specified number of shares prior to the reconstruction and after the reconstruction you held a specified number of shares. You received no proceeds upon the capital reconstruction. In 2011, the group carried out a demerger of all the shares in one of its wholly owned subsidiaries. The demerger was carried out by a capital reduction and court approved scheme of arrangement. Under the terms of the scheme or arrangement, shareholders were entitled to one T share for every three shares they owned in G in May 2011.

Relevant legislative provisions: Income Tax Assessment Act 1997 Section 130-20.

Reasons for decision: Summary: While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision. The time when you acquire shares is significant in determining the capital gains tax (CGT) consequences which can arise in relation to your shares. If the shares are acquired before 20 September 1985, there is generally no CGT liability which can arise from a CGT event. If shares are acquired after 20 September 1985, the CGT legislation will apply when a CGT event occurs, such as the disposal of the shares. Where a company issues fully paid bonus shares to a shareholder in respect of a share that they own and no part of the bonus share is considered a dividend the bonus shares are deemed to be acquired on the day that the original shares were acquired. In your case, the bonus shares you received in late 1985 and late 1986 are taken to have been acquired on the date you acquired your original shares prior to 20 September 1985. The bonus shares you received during the period mid 1987 to late1988 will need to be apportioned between the shares you acquired prior to 20 September 1985 (including the bonus shares deemed to be acquired on this date) and the parcel of shares acquired in early 1987. The bonus shares you received in late 1989 will need to be apportioned between the shares you acquired prior to 20 September 1985 (including the bonus shares deemed to be acquired on this date), the parcel of shares acquired in early 1987 (including the bonus shares deemed to be acquired on this date) and the shares acquired on late 1989.

Please check this edited version to be sure that there are no details remaining that you think may allow you to be identified. If you have any concerns about this ruling you wish to discuss, you will find our contact details in the fact sheet.