BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.
On 1 July 2016, Growthpoint Properties Australia Limited (GOZ) announced a takeover bid to acquire all the outstanding units in GPT Metro Office Fund (GMF) by way of an off-market takeover bid.
Under the Scheme of Arrangement, GMF unit holders who disposed of their GMF units to GOZ were entitled to receive the Scheme Consideration in the following forms for each GMF share held:
This article will look at three scenarios:
- Mixed Consideration: Scrip-for-scrip applied
- Mixed Consideration: Scrip-for-scrip not applied
- Cash Consideration
1. This price equates to the cash consideration received under the Offer of $1.25 per GMF unit plus the value of 0.3968 Growthpoint securities acquired by Growthpoint SA at a price of $3.15 ($1.25 + 0.3968 × $3.15 = $2.50)
Cost Base Proportion - Partial scrip-for-scrip Roll-over
When the partial scrip for scrip roll-over is chosen, the cost base of GMF that is attributable to the exchanged GOZ shares is worked out as follows:
|Cost Base of GMF for the
These scrip component percentage will be entered in the Corporate Actions screen.
A fund has a holding of 10,000 GMF shares purchased on 23/07/2015 at a price of $2.04.
As a result of the merger, the fund will receive the following:
|= GOZ share per GMF share held x GMF holdings
= 0.3968 x 10,000
= 3,968 shares
= 3,968 x price of GOZ per share
= 3,968 x $3.15
|= Cash received per TMF share held x GMF holdings
= $1.25 x 10,000
= Cash received per TMF share held x GMF holdings
A fund can either choose to:
- Apply the scrip-for-scrip rollover
- Not apply the scrip-for-scrip rollover
This help file will look at both scenarios.
Scenario 1 - Scrip-for-scrip rollover applied
This example will assume that the fund has elected to apply scrip-for-scrip rollover to the acquisition of the GOZ shares.
Scrip for Scrip Rollover
Scrip for scrip rollover summary:
- Deferred Capital Gains
The rollover allows you to disregard the capital gain made from the original shares, units or other interest. You are taken to have acquired the replacement shares, units or other interest for the cost base of the original interest.
- Backdating to original purchase date
The replacement shares or interest, are taken to have been acquired on the original shares' or interest's purchase date.
|From the Main Toolbar, go to Investments.
|Select Corporate actions from the list.
Select New Corporate Action.
Record the following details for step one:
|Security to Process
|This will be the existing security the demerger is recorded for
|The corporate action type being processed
|The chart account that will be affected by the demerger
Record the following details for step two:
Ensure the following details are recorded for step two:
|Ex / Balance Date
|Simple Fund 360 will apply the demerger to parcels purchased before the ex date.
|Corporate Action Date
|Simple Fund 360 will create a demerger transaction in the Transaction List based on the corporate action date
|Select New Security
|If the fund did not currently hold shares in GOZ, this would be added by selecting Add New Investment
|Applying scrip-for-scrip, this will preserve the original contract of the GMF holdings
Record the details of the number and costbase of shares of the demerged security:
|Account required for the corporate action
|Automatically populated by Simple Fund 360
|Units in Head security after demerger
|The original holding of GMF shares
|Units in Demerged Security
|The amount of GOZ shares acquired
|Demerged Security %
|The proportion calculated previously. The head security percentage will populate automatically
Select Process Corporate Action
Proceed to the next step to process the cash consideration received.
The fund received the cash component of $12,500 on 27/09/2016.
This will be recorded in Simple Fund 360 by the following journal that disposes the remaining shares and receives the cash amount:
Scenario 2 - No scrip-for-scrip applied
This example will assume that the fund has not elected to apply scrip-for-scrip rollover to the acquisition of the GOZ shares.
This will be recorded by the following journal:
|Growthpoint Properties Australia shares
|Metro Office Fund shares
Click next to the credit entry for 77600/GMF.AX to view the Disposal Details screen and see that the capital gain has been automatically populated by Simple Fund 360.
Scenario 3 - Cash Consideration
The fund received the cash consideration of $25,000 on 27/09/2016.
This will be recorded in Simple Fund 360 by the following journal that disposes the remaining shares and receives the cash amount.
The capital gain associated with the disposal of the shares will automatically be calculated by Simple Fund 360.
Click next to the credit entry for 77600/GMF.AX to view the Disposal Details screen.
This will show the capital gains automatically calculated by Simple Fund 360.