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The demutualisation of the life offices (AMP, National Mutual and Colonial Mutual) has significantly boosted market capitalisation and increased the number of shareholders over the past ten years. The big advantage for members has been the exchange of an interest that could not be traded, for shares that are listed on the Australian Stock Exchange.
However, when they come to sell those shares, as a general rule, shareholders are subject to Capital Gains Tax. Even though nothing was paid for the shares, they have a value for CGT purposes, which is reflected as “Acquisition Cost per share” in the table below. That acquisition cost may be only part of the cost base which can be deducted from the capital proceeds to arrive at the capital gain.
The cost base may also include costs associated with the sale of the shares such as fees paid to a broker.
Below is a selection of demutualisations of the past twenty odd years with the more recent demutualisations highlighted:
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DEMUTUALISATIONS SINCE 1985
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Company
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Acquisition Cost per share |
Acquisition Date |
Notes (see below)
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| AMP Ltd |
$10.43
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20 November 1997
|
1
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| Australian Stock Exchange Ltd |
N/A
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October 1998
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2
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| Canberra Perm BS to Canberra Adv Bank |
N/A
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August 1990
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3
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| Capita Financial Group |
N/A
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October 1990
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3
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| Civic Co-op PBS to Canberra Advance Bank |
N/A
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June 1986
|
3
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| Colonial Mutual Life Assurance Ltd |
$3.31
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11 November 1996
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4
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| First Provincial Building Society |
N/A
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November 1993
|
8
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| Hibernian Friendly Society (NSW) Limited |
$1.162
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2 September 2002
|
7
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| Illawarra Mutual Building Society |
N/A
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August 1989
|
8
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| IOOF Ltd |
$2.53
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14 June 2002
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| Ipswich & West Moreton Bldg Society |
N/A
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October 1993
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3
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| Mackay Permanent Building Society |
N/A
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May 1993
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8
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| Metropolitan PBS to Metway Bank |
N/A
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July 1988
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3
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| National Mutual Life (now AXA) |
$1.14
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8 August 1995
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| NIB Holdings Ltd |
NIL |
5 November 2007 |
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| Northern Building Society |
N/A
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July 1993
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3
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| NRMA Insurance (NIGL) - allocated |
$1.78
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19 June 2000
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5
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- facility |
$2.75
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6 August 2000
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6
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| NSW Building Society to Advance Bank |
N/A
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June 1985
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3
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| Over 50s Mutual Friendly Soc (OFM) |
$1.65
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12 June 2001
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| Perth BS & Hotham PBS to Challenge Bank |
N/A
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April 1987
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3
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| Pioneer Permanent Building Society |
N/A
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August 1993
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8
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| RESI-Statewide BS to Bank of Melbourne |
N/A
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July 1989
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3
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| St George Building Society |
N/A
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May 1987
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8
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| Sunstate Credit Union to First Provincial BS |
N/A
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October 1997
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3
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| Tasmanian PBS to Tasmanian Bank |
N/A
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September 1987
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3
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| The Co-operative BS of SA to Adelaide Bank |
N/A
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January 1994
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3
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| The Rock Building Society |
N/A
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December 1992
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3
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| United PBS to National Mutual R Savings Bank |
N/A
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March 1987
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3
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| Wide Bay Capricorn Building Society |
N/A
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December 1992
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8
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N/A = Not Available PBS = Permanent Building Society
Notes:
- The acquisition cost per share of $10.43 applies to Australian residents disposing of AMP shares prior to the demerger of the UK operations of AMP (to HHG), which took place in December 2003. All other AMP/HHG shareholders should go to the ATO website
http://ato.gov.au/individuals/content.asp?doc=/content/46226.htm as the tax consequences of the demerger are too complex to explain here.
- ASX issued 166,000 shares to 606 former members. There were two categories of members and the Acquisition Cost or Cost Base is not on the public record. (Shares ended their first day’s trading at $4.25.)
- For record purposes only.
- ATO advises that under sec 121AA of the ITAA 1936, where a policyholder disposes of a listed demutualisation share, the acquisition cost is the lesser of the ‘embedded value” of $3.66 and the listed first day trading price of $3.31.
- If shares were sold through the Facility the capital gain per share is the excess of the facility price of $2.75 over the acquisition cost of $1.78.
- If more shares were purchased through the Facility the acquisition cost of those additional shares is $2.75 each.
- The Tax Office granted Hibernian/Aevum an extension of time to list its shares after a two year period from it demutualising. Check on the ATO website for the tax concessions available to Hibernian/Aevum shareholders who were Hibernian members.
- Demutualisation via listing on an Exempt
Exchange.
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