Share Consolidation?!

Artcore

What happens if the taxpayer has share consolidation during the year, say 10 shares into 1, when you have 500 shares originally, plus 5/6 shares every years from dividend reinvestment plan (DRP) for 2 years?

Year 0: 500 shares at $1 each

Year 1: 5 shares at $0.80; and 4 shares at $0.90

Year 2: 6 shares at $0.75; and 4 shares at $1.20

Since those DRP shares are all less than 10 units, how do you consolidate  or reverse split them since you need track cost base of the original shares?

黑山老妖

I think the share DRP work like this:
1. all dividends are counted as income(with franking) into the year they are to be paid out.
2. All shares are counted as been purchased at the DRP price and date of issue of shares. So you work out your CGT accordingly.

Devil_Star

Agreed with LaoYao.
As far as I know, tax accoutants would charge higher fees on processing DRPs than regular dividends.

courier

1.先确定consolidation之后有多少个units。这个例子是之前是519，之后就是52units。确定分配比率， 52/519,拿到的系数确定每个shares的新的units，cost base 不变。卖出的时候，稍加注意一下，要凑成整数的unit去卖。不能随意选取，否则容易出问题。CGT按照实际的购买日期计算是否有discounted或者其他

2.如果cost base有变化，然后再调整cost base。

courier

要是更精确的，就是dividend有时不是完全DRP的，还要数据记录遗留在账户中的数额，这个就比较麻烦了

Artcore

I know all these, how dividends and DRP is treated, that's not my issue here.

Artcore

Thanks for your answer.

(500+4+3.60+4.5+4.8)/519 Average cost base of original shares = $0.996
(500+4+3.60+4.5+4.8)/52 Average cost base of consolidated shares = $9.94

Shares 1-50 = $500/50=$10 (Same date as original acquisition)

Shares 51 = 5x0.8+4x0.9+1x0.75 =$8.35
(Use most recent date, i.e. Year 2: when last parcel of share was acquired for $0.75)

Share 52 = 5x0.75+4x1.20=$8.55
(Use most recent date, i.e. Year 2: when last parcel of shares was acquired for $1.20)

Therefore if all the shares are sold on 30 Jun of Year 2, for $12 per share, then only shares 1-50 will get the discount, the others are non-discounted capital gains.

Is my calculation correct? Assume the Year referred in above example is Financial Year (rather than Calendar Year)