What is the “cost base” of the shares?
- The “cost base” refers to the amount calculated as the cost for income tax purposes of your LGA shares.
- When you decide to sell part or all of your LGA shares, you can determine your reportable “capital gain” (or “capital loss”) – by deducting the “cost base” amount from the proceeds you receive from selling your LGA shares.
- The “cost base” value is calculated by multiplying the number of LGA shares you sell by a factor of $2.92 per share.
- Your accountant or tax agent can advise if you have any additional costs in calculating the “cost base” of your LGA shares. As your LGA shares were issued without actual cost you, most (if not all) LGA shareholders would have no additional costs to include in their “cost base”.
Where does the “$2.92 per share” come from, as I did not pay anything to receive my Transport Friendly Society Limited (now Longevity Group Australia Ltd ) shares?
- This is a special tax concession provided under income tax law by the Australian Taxation Office, and only applies to the LGA shares you received as a result of the demutualisation the Transport Friendly Society Limited on 30 June 2014.
- If you have acquired other LGA (formerly TFSL) shares in any other situation, the normal cost rules apply – which means your “cost base” is then limited to your actual cost incurred in acquiring the shares.
Does the Australian Taxation Office know about this?
- Yes, the Australian Taxation Office is aware of the demutualisation of Transport Friendly Society Ltd, and the special tax concession for LGA shares – and also the “$2.92 per share” factor, for purposes of calculating the “cost base” of your LGA shares.
Do I have to do any tax calculations and reporting now?
- When preparing your tax return, you only have to do the calculations for the year in which you sell part or all of your LGA shares.
- In other words, if you do not plan to sell your LGA shares, all you have to do is remember the special tax concession “cost base” of $2.92 per share for when you do wish to sell your LGA shares.
What do I have to give my tax agent?
- As a general rule you only have to give your tax agent information that will help in preparing your tax return, for the year that the return relates to.
- Such information includes any income derived in a particular year from your LGA shares. Typically, this could be:
- Any dividend income you have received in the year, from your LGA shares represented by a dividend statement.
- Any capital gain or capital loss, arising from a sale of part or all of your LGA shares in the year.
- Inform your agent of the number of LGA shares you sold in the year, and how much you received for selling those shares.
- Advise your tax agent that a special tax ruling was issued by the Australian Taxation Office on 2 April 2014, for the benefit of TFSL shareholders – which is described as Class Ruling CR 2014/35.
- Your tax agent may also seek bank records and other information to help prepare and complete your tax return, as may be relevant to your own personal circumstances.
What is the impact on my tax return for shares issued?
- The actual issue of LGA (formerly TFSL) shares (effective 30 June 2014) had no personal tax reporting impact for you.
- You may need to report dividend income or realised capital gain (or loss) you derive from your LGA shares – but that only needs to be considered for a tax return that relates to a year in which you actually derive dividend income or realise a capital gain (or loss) on your LGA shares.
- If there is no dividend income and no realised capital gain/loss for a year, there is nothing to report (for these items) in your tax return for that year.
The above is general tax information only, based on advice that LGA has received itself. It is provided to help you share this information with your accountant and tax agent – who is the appropriate person to give you tax advice, and to help prepare your personal tax return.