Forum Topics Takeovers and CGT events
Nikman
2 weeks ago

Thanks very much Bear

7
0
Reply
Nikman
2 weeks ago

As per the latest announcement it seems like MOC will enter into an agreement where REA will purchase MOC for $1.95/share and not much for holders to do with transaction expected before 30 June. My question is does this work like a normal CGT event for holders as in you would treat it as bought the stock for $xx and sold for $1.95 (and 1.95-x is the CG), or is there some special treatment for this event? I'm assuming the latter is not the case but just thought I would check as have not done a tax return transaction like. Any advice appreciated and of course understand it's not financial/accounting advice etc.... 

Putting aside my question I think this is a great outcome for MOC holders, well above my target price and MOC have sold at the right time (it's hard to see better conditions for a mortgage broker and refinancing in general than what happened over the past year). 

6
0
Reply

Bear77
2 weeks ago

Yes, your assumption is correct Nikman.  When you are paid cash, it is a straightforward CGT event as you have described.  This can change however if you are paid in shares, so in the event that you were issued with REA shares in exchange for your MOC shares as an example, then under certain circumstances the ATO can grant what I believe is called "rollover relief" which - if granted - would mean that no CGT event would be deemed to have occurred - until you sell the REA shares.  Most companies usually apply for this rollover relief in the event of a scrip-for-scrip takeover (meaning shares for shares instead of cash for shares) and they then tell their shareholders if that relief has indeed been granted to them by the ATO. 

However, when it's a cash payment, such as the one you have described, there is no rollover, so it's just a basic CGT event as though you had chosen to sell the shares on-market at that price.  If you receive the payment before June 30th, or to be more precise, if the effective payment date - or the date that the transaction is deemed to have taken place - occurs prior to or on 30th June this year, then the CGT event will need to be accounted for in your FY2021 tax return.

9
1