When paperwork for capital gains tax is a 'nightmare'

By George Cochrane
Updated December 14 2017 - 9:43am, first published November 21 2017 - 12:38am

In your column of October 29, you are correct to advise reader ML that she is in a nightmare situation if she only has a calculator or a spreadsheet to use to calculate the CGT cost bases after having purchased pre-1985 shares and then joined the Bonus Option Plan (BOP) as well as accepting subsequent rights issues. Although she didn't name the shares, I assume she refers to ANZ, which has a history of BOPs and rights issues. The nightmare disappears if she uses a system that specialises in CGT reconstructions using historical data. We have such a system, used by accountants etc and, with this system I replicated ML's account of her holdings. I assumed she had bought 2000 ANZ shares at $5/share on September 19, 1985 (the day before CGT started), then joined ANZ's BOP when it opened, and accepted future rights issues and the BOP issues on all her shares. The result is that she would have, as at June 30 this year, 34,105 ANZ shares with a market value of $979,495 spread across around 350 parcels of pre and post shares. Of these, 17,417 shares would be pre-1985 shares and exempt from CGT and 16,688 would be post shares subject to CGT. At the closing price of $28.72 a share on June 20, her assessable capital gain would have been $220,206 if she had sold all her shares (ignoring brokerage and other sales costs). G.K. AIMS-STM Pty Ltd

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