Ann: Determination of in specie dividend - Woodside Merger, page-40

First 40 Last

Share
Profile

Follow
Hobbit2233

1,173 Posts.

56

23/05/22

23:42

Post #: 61577564
Share

Originally posted by bellenuit: ↑

OK, I get it now.

The BHP dividend, paid in the form of WPL shares, will be fully franked. The WPL shares themselves have no franking credits attached as they are not cum dividend.

However, the dividend for your tax return is the cash value of the dividend even though it is paid as WPL shares. So you will be told something like (using easy figures) you have received a fully franked BHP dividend to the value of $700. Since this is fully franked, you include in your tax return a grossed up dividend of $1,000 (= dividend of $700 plus franking credit of $300). The franking credit when fully franked is Dividend * 3/7. Note that this is a BHP dividend, not a WPL dividend. The 45 day rule that someone mentioned in a previous post only becomes an issue if you bought the BHP shares that entitled you to this dividend less than 45 days before the scheduled dividend payment date of 1st June (also subject to the other requirements of the 45 day rule). This is all you need to know about the dividend part of the BHP payment.

Now the fact that this dividend hasn't actually been paid to you as $700 cash, but as $700 worth of WPL shares means you must now look at the implications of this. The WPL shares you receive are not cum dividend (the last WPL dividend was paid on 23 March and no new dividend has been declared). But you need to keep a record of this for capital gains purposes because whenever they are sold you will have to pay capital gains tax.

The cost base of these WPL shares will be $700 (just as if BHP had paid you in cash and you used that cash to buy WPL dividends). Whenever they are sold, there will be capital gains (or losses) depending on the sale proceeds less this $700 cost base. This will be the case whether you elect to have them sold by the selling agent or you sell them yourself sometime later.

Even if sold on your behalf by the selling agent, the sale proceeds will unlikely be $700. This is because of the time difference between when the $700 was determined as the cost price (probably the closing price on 31st May - the day prior to allocation) and when actually sold by the selling agent, which may be several days later. So, those opting to have their WPL shares sold on their behalf, will have a capital gains (or loss) transaction in their 2022 tax return.

Expand

Thankyou very much @bellenuit. That's a very detailed explanation and just what I needed. I really appreciate the effort you went to.
Its all clear to me now. Had to read it a few times though LOL.
I don't have to worry about the 45 day rule as I have held the shares for 2 years, so that's one less complication. But I will take careful note of the capital gains/losses side of things.
Thanks again!.

BHP Price at posting: $47.83 Sentiment: Hold Disclosure: Held
1 Upvote

0 Great analysis

Reply

Top Stories

NAM

Olam Agri announces third extension to Namoi takeover bid

MYE

Metarock falls -10% as QLD regulator takes it to court over 2021 death of Graham Dawson – after raiding company offices

PEN

Peninsula promises restart of Lance uranium project in Wyoming by the end of 2024

Is the ASX getting its groove back? Here's 5 IPOs in September to watch

EIQ

Echo IQ tests show heart failure can be detected in 86% of cases with AI

There are more pages in this discussion • 62 more messages in this thread...

First 40 Last

Add BHP (ASX) to my watchlist

(20min delay)
Last $39.96		Change -0.370(0.92%)		Mkt cap ! $203.8B

Open	High	Low	Value	Volume
$40.20	$40.35	$39.95	$135.5M	3.376M

Buyers (Bids)

No.	Vol.	Price($)
28	13356	$39.95

Sellers (Offers)

Price($)	Vol.	No.
$39.96	1366	5

View Market Depth

No.	Vol.	Price($)
7	1367	39.990
17	24901	39.980
16	15880	39.970
11	4506	39.960
30	15574	39.950

Price($)	Vol.	No.
40.000	5702	9
40.010	11665	19
40.020	6314	15
40.030	5830	11
40.040	5645	12

Last trade - 13.34pm 03/09/2024 (20 minute delay)

BHP (ASX) Chart

Ann: Determination of in specie dividend - Woodside Merger, page-40

Olam Agri announces third extension to Namoi takeover bid

Metarock falls -10% as QLD regulator takes it to court over 2021 death of Graham Dawson – after raiding company offices

Peninsula promises restart of Lance uranium project in Wyoming by the end of 2024

Is the ASX getting its groove back? Here's 5 IPOs in September to watch

Echo IQ tests show heart failure can be detected in 86% of cases with AI

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News

Ann: Determination of in specie dividend - Woodside Merger, page-40

Top Stories

Olam Agri announces third extension to Namoi takeover bid

Metarock falls -10% as QLD regulator takes it to court over 2021 death of Graham Dawson – after raiding company offices

Peninsula promises restart of Lance uranium project in Wyoming by the end of 2024

Is the ASX getting its groove back? Here's 5 IPOs in September to watch

Echo IQ tests show heart failure can be detected in 86% of cases with AI

Featured News

Buyers (Bids)

Sellers (Offers)

Featured News