LOM (ASX) LOMOA

Originally posted by zippy1 ↑

Ecat88,

Good point ... CGT and50% CGT discount are relevant factors to consider.

You will actually find that if you sell your LOMOA before September 2017 (i.e. you never exercise them) that the 50% CGT discount still applies as the LOMOA options (asset) has not changed during this time.

In other words, if you buy LOMOA tomorrow and see them after 14 November 2016 and before 30 September 2017 (without exercising them) you will still be entitled to utilised the 50% CGT concession.

By this time you would hopefully be in a better position to know where LOM was at and heading ... and you may fell very comfortable to exercise the LOMOA before 30 September 2017 and reset purchase date and sell the new LOM shares after 30 September 2018.

You could also exercise some of you LOMOA options and utilise the 50% CGT discount (get some of you invested funds back) and exercise some LOMOA and hold the new LOM (hopefully free carried) for 12 months after 30 September 2015.

It's only when you exercise options, that the purchase date gets reset to the date you exercised the options ... this is based on the fact that you have created a new asset (LOM) shares when you pay exercise price. The cost base of the new LOM shares will be the cost paid to exercise the shares, in this case 20 cents plus the amount paid to purchase the LOMOA options with the purchase date now being reset to the date the LOMOA options were exercised.

It should also be noted that the "new" Options which with an April 2016 expiry date will never exceed 12 months ownership period and hence would not be entitled to 50% CGT discount (if sold before April 2016).

I have personally considered the 50% CGT discount / above factors and plan on doing the following:

(i) sell some LOMOA before Sept 2017 an after they have been held for 12 months in order to create enough "taxable CGT" (after discount) to utilise my wifes lower tax brackets (she is a stay at home mum).

(ii) will exercise all of my new April 2016 options, before April 2016 ... and hold the subsequent LOM shares for more than 12 months to be able to utilise 50% CGT discount. These shares would then be available for sale after April 2017. I would the sell some of these LOM sahres before June 2017 in order to create enough "taxable CGT" (after discount) to utilise my wifes (she is a stay at home mum) unused lower tax brackets for my wifes 2017 icnome tax return;
(iii) for the 2018 year (after 1.7.2017) I would achieve the same result by selling either some of the LOMOA (Sept 2017) before Sept 2017 (exercise date);
(iv) for the 2019 year I would offload some of the LOM per point (ii) above;
(v) for 2019 years onwards I would sell as many LOM shares (from both exercised options) as required in order to fully utilise my wifes lower tax brackets;
(vi) will keep doing this ... whilst always reassessing LOM and it's status and deciding whether I should sell any LOM. Utilising my wifes unused lower tax brackets will not over right my decision to make a commercial decision ... tax minimisation should not be primary motivating force / factor.

As you can see I have considered the 50% CGT discount factor and has been considered (by me) regarding my future plan. It's no just a matter of seeing if it works out hat way,

Obviously, the above advice should be confirmed by your accountant or Aust'n Tax Office. I am 100% sure that what I have stated above is correct based on current legislation.

Don't forget that proposed "Tax Reform" (everything is on the table) may change the above ... my impact and change the above advice.

The other factor which is out of our hands and may impact the above is a takeover. If our shares are purchased via takeover bid before 12 month, no 50% CGT discount applies ... mind you if we get a takeover bid that quickly, I'm sure the only acceptable offer, needs to very generous.

Hope this makes sense and is useful information.

Zippy1

Expand

Thanks very much for your detailed explanation Zippy, much appreciated

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