Hi Anyone here previously own Westoz (WIC) shares which has now been taken over by WAM Capital (WAM)? I don’t know how to handle the cost base for the newly allocated 0.686 WAM shares for each of our WIC shares held using the ‘CGT Scrip-for-scrip roll-over relief’. I have read the scheme booklet and ATO website to no avail, see links. Any help appreciated. I the meantime I have written to both WIC and WAM for advice.
Hi @Vince This is NOT TAX advise (as I’m not licensed for that) but the way I’ve done similar issues. I’ve not directly held either share but had similar issues… I’m presuming you are taking ROLLOVER RELIEF rather than getting cash as that will be a different outcome…
Basically the amount you paid for (in your case WIC) should now be reflected in your holding in WAM.
Presuming you had a single event in acquiring WIC then you would take your cost of acquiring WIC and now apply that to the cost of holding WAM because the script roll over is not 1-1 you will have different unit costs for each holding.
So say you acquired 1,000 WIC at $10.00 each (just keeping the maths simple) so you would have outlaid $10,000 (101000) and this would be your cost base (I’m ignoring brokerage)… you will now get 686 WAM shares (10000.686) and your unit cost base is $14.5772594752 (10,000/686) which will mean your cost base is still $10,000.
In terms of Navexa I’d do a sell for WIC at what ever your cost base is ($10.00 in the example) so that it will dispose of your holding in WIC but not appear on the CGT report and enter a new holding of WAM at the $14.5772594752 figure per share as the worked example… Your figure will be different you have to work it out.
Now the issue of the date… I’d enter the sale (disposal) of WIC at the date of the offer. In the case of entering WAM its the date you acquired WIC under the terms of the scheme 12.2(g) … The consequence in Navexa is that WAM may have paid dividends from when you “acquired” them (as WIC) so in WAM you will need to manually delete the dividends you did not receive in WAM…
If you have multiple acquisition events for WIC then you need to do this per line… Its why spreadsheets are so handy! Of course if your smart about your spreadsheet layout you can use it to upload into Navexa and save all that retyping. For 1-2 entries its probably easier to manually add, over 3 lines and I’m more likely to import.
There is no magic button with this and its fairly common but reasonably straight forward. Basically the ATO realise that for script for script you generally get to keep everything the same. The only thing that tends to stuff it up is where its not a 1 for 1 issue.
Hope that assists you but the section of the scheme you have to read is 12 and it covers a number of different possible disposals that you might get involved with depending on what options were available to you, how you held them and if your a resident or not… Just ignore what does not apply to you and follow what does. Cheers Mike
Thanks for the explaination! What you have mentioned makes absolute sense. After re-reading the ATO website, the Scheme booklet and with your explaination it now makes more sense. I see what you mean about the WAM dividends back dating…bit annoying. What complicates matter further in my case is that I aquired the WIC shares over 5 years ago and as part of the WIC DRP I have 30% more shares today than I did 5 years ago and this creates multiple aquisition events. I’m going to take the lazy way out of this one and use the Navexa cost base and backdate the aquision of all WIC shares to the initial purchase. Plans are I will hang onto the WAM shares for many years and if the ATO want pull me up on this small inconsistency when I finall dispose of them good luck to them. However I will still need to delete the WAM dividend or DRP. Messy but at least I understand what I’m doing now.
Many thanks for your help,
Hey @Vince - mergers/ acquisitions are definitely some of the more complicated scenarios that we handle in Navexa…
Luckily we have a feature to handle the complexities for you!!
If you navigate to your WIC:ASX holding, and check the “Enter Trade” dropdown, you should see an “Add Merger” Option
From there, you can select the pre-verified WIC → WAM Acquisition:
That should take you through to the next form, which should be pre-filled mostly. Tweak the values to your situation and off you go! (the quantities can be slightly different)
Let us know if you have any questions
Holy S*!T Nick, that is a fantastic feature!
Worked like a charm as you mentioned had to tweak the allocated WAM shares (by 1) otherwise perfect.
Hi @Vince two things… Not so much for you but for others that may read this thread later. Its a bit of Why Navexa and bit of a rant on maintaining accurate records…
It’s important when you’re dealing with any software to have an underlying idea of what result you are expecting before unleashing it, particularly on your portfolio. That way you can proceed with internal confidence that you are maintaining accurate records. Accurate records leads to good decision management. Its the old “garbage in - garbage out” motto. but as long as they are correct then what ever you do next will be more accurate. Imagine you’re taking off on a plane and you’re off by 1 degree. If you hold that path and don’t correct how far from your destination will you be flying LA to NYC? The answer - further then you’d think; you’ll be closer to Washington DC rather than New York. I’m reading a book Atomic Habits. It’s about getting the little things right to get big results.
What are the consequences of taking a short cut? Well that will happen when you sell. As you’ve built up a package of now WAM shares you may want to, at some future date, trim them. (Partially sell a section of your holding over multiple tax years). One of the important features that is coming in Navexa is to pick your own parcel of shares that you sell. I’m of the Frank Packer School. “Governments are not spending our taxes wisely enough that I need to make more donations to them than I have to.”. The best way to avoid paying more taxes than you should is accurate records.
I’m a bit an an Alexander Elder fan. I spent how long accumulating this capital that I’ve invested in this company? My job is to protect it from losses! There are lots of elements in the market far from my control that can eat my capital. Maintaining accurate records are well within my control. As you can see I take pride in the records I maintain in Navexa are as accurate as I can get them. It took me 45 years of market activity to accumulate them. If you add in the savings I did as a kid we are over 60, if you want to look at inter-generational wealth transfer we are over 100 years. So its worth an hour or two of my time to get it right.
Agree Mike, it is important to have an understanding of what you are doing and maintain accurate records to make sure you make informed decisions with your investments and the tax implications of them. Even if I was tempted to take a shortcut they have this covered at Navexa so the records are maintained accurately.
For the record I received a phone call from WAM Capital in reply to my email enquiry regarding this topic and after the initial disclaimer from them regarding tax advice I am confident I have a clear understanding of how to handle it with regard to my tax and more importantly that it is being handled absolutely correctly by Navexa!