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Restructure ATO Class Ruling

 

The Australian Taxation Office has issued its class ruling regarding the income tax treatment for applicable securityholders of the recent restructure. A copy of the class ruling is available by clicking here.

 

TAXATION

 

The following comments are based on the assumption that you are an Australian resident for tax purposes and you hold your AusNet Services stapled securities on capital account. Income tax consequences may differ for non-resident securityholders or for securities that are held as trading stock or as part of a profit-making undertaking or scheme. You should seek independent advice from a qualified person to determine the taxation consequences applicable to your circumstances.

 

Capital Gains Tax

 

You will make a capital gain from the sale of a security if the capital proceeds received are greater than the cost base of the security. The cost base of a security is the amount you paid to acquire it (including any incidental costs such as brokerage fees), less the amount of any returns of capital paid to you in respect of the security. You will make a capital loss from the sale of a security if the capital proceeds are less than the reduced cost base of the security (being the cost base reduced by the amount of any returns of capital).

One AusNet Services stapled security comprises three separate assets for capital gains tax purposes, as follows:

  • 1 x share in AusNet Services (Distribution) Ltd;
  • 1 x share in AusNet Services (Transmission) Ltd; and
  • 1 x unit in AusNet Services (Finance) Trust.

 

In order to calculate the capital gains tax outcome for each separate asset within the AusNet Services staple, you need to apportion your cost base (or reduced cost base) and any capital proceeds received, across the separate assets that make up the stapled security. This apportionment should be done on a reasonable basis.

One possible method of apportionment is on the basis of the relative Net Tangible Assets ("NTA"). Security holders who wish to use NTA as a basis for determining cost base and capital proceeds should use the NTA closest to the date of acquisition (for determining cost base apportionment) and the NTA closest to the date of sale (for determining capital proceeds apportionment). To assist AusNet Services' securityholders to calculate capital gains tax outcomes in accordance with the above requirements, a table of six-monthly NTA data and returns of capital paid data can be viewed by clicking the Relative Net Tangible Assets (NTA) of entities in AusNet Services.

 

 

History of Capital Returns
(included in distributions made to AusNet Services' securityholders)
Date paid   Return of Capital (per security) 
26 Jun 06   2.210 cents
14 Dec 06   3.619 cents
28 Jun 07  3.544 cents
19 Dec 07  3.288 cents
23 Jun 08  3.397 cents
18 Dec 08  2.177 cents
25 Jun 09   1.324 cents
22 Dec 09   0.824 cents
29 Jun 10  0.148 cents
22 Dec 10  0.181 cents
29 Jun 11  0.338 cents
21 Dec 11  0.454 cents
29 Jun 12  0.508 cents
21 Dec 12  0.266 cents
30 Jun 13 0.084 cents
23 Dec 13 0.391 cents
27 Jun 14 0.408 cents

 

Note: Capital returns are paid by AusNet Services (Finance) Trust and are not assessable income for tax purposes.

 

CGT discount

 

You may be able to reduce your capital gain by applying a ‘CGT discount', where you are an individual security holder or a complying superannuation fund and have held AusNet Services stapled securities for at least 12 months prior to their disposal. Companies are not entitled to the CGT discount. The CGT discount applies after you have applied capital losses against your capital gains.

Individuals who are entitled to the CGT discount can reduce their assessable capital gain by 50%. Complying superannuation funds that are entitled to a CGT discount can reduce their assessable capital gain by one third. The assessable capital gain made on disposal of each security must be included in your assessable income for the income year in which you have disposed of your securities.

 

Detailed Capital Gains Tax example

 

Click for a detailed example of the calculation of Capital Gains Tax (PDF 37.1KB).

DISCLAIMER: You should not rely on this information as taxation or financial advice as it may not be relevant to your circumstances. You should seek independent advice from a qualified person to determine the taxation consequences applicable to your circumstances.

 

AusNet Services Group Restructure

 

Prior to 18 June 2015, a stapled security in the AusNet Services Group consisted of the following:

 

  • A share in AusNet Services (Transmission) Ltd (“AST”) (formerly SP Australia Networks (Transmission) Limited);
  • A share in AusNet Services (Distribution) Ltd (“ASD”) (formerly SP Australia Networks     (Distribution) Limited); and
  • A unit in the AusNet Services Finance Trust (“ASFT”) [formerly SP Australia Networks (Finance) Trust)]

 

On 18 June 2015, the AusNet Services Group restructured with AusNet Services Limited (“ASL”) being incorporated as the new holding company for AST, ASD & ASFT.

 

As a result of the restructure, AusNet Services Group security holders held one ordinary share in ASL for each stapled security they previously owned.


The Australian Taxation Office have issued a Class Ruling CR 2015/45 – Income tax : Restructure of AusNet Services. The Class Ruling provides that security holders are entitled to choose roll-over relief in respect of the disposal of shares or units in AST, ASD and ASFT.

 

For capital gains tax purposes, if you acquired your shares in ASL under the Restructure and chose to obtain rollover, the cost base of your shares and units in ASD, AST and ASFT is also rolled over into the cost base of your shares in ASL. The determination of the cost base of your shares and units in ASD, AST & ASFT is explained under Capital Gains Tax, which is also relevant for calculating the immediate capital gains tax implications of the Restructure if you did not choose rollover.

 

AusNet Services Group Dividends

 

Prior to the restructure on 18 June 2015, distributions to security holders consisted of the following components:

 

  • Interest Income
  • Return of Capital
  • Fully Franked Dividend

 

Subsequent to the restructure, AusNet Services Group will pay dividends that are either fully franked or partly franked. Details of the franked component of each dividend will be provided on the dividend statement you receive with each dividend payment.

 

Singapore Resident Individual Investors

 

Treatment of Income distributions made by AusNet Services Finance Trust

 

[1] Income distributions made by AusNet Services Finance Trust and received in Singapore by Singapore resident individual investors will be exempt from Singapore income tax. Because the income distribution is exempt, you will not be entitled to any credit or refund of Australian withholding tax levied.

 

[2] Income distributions made by AusNet Services Finance Trust and received in Singapore by Singapore resident individual investors through a partnership in Singapore will be subject to Singapore income tax. However, you may be able to claim a tax credit for the Australian withholding tax under the Income Tax (Singapore - Australia) (Avoidance of Double Taxation Agreement) Order 1969. The tax credit claimable in Singapore is restricted to the amount of Singapore tax payable on the distributions (net of attributable expenses). DISCLAIMER: You should not rely on this information as taxation or financial advice as it may not be relevant to your circumstances. You should seek independent advice from a qualified person to determine the taxation consequences applicable to your circumstances.

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