CGT on AB InBev share of­fers

Weekend Argus (Saturday Edition) - - FRONT PAGE -

In light of AB InBev’s take-over of SABMiller, SABMiller share­hold­ers have to con­sider the cap­i­tal gains tax (CGT) im­pli­ca­tions of the options they have been given. It would be help­ful if you could ex­plain the CGT im­pli­ca­tions in each of the fol­low­ing sce­nar­ios: • Sce­nario one: ac­cept the cash of­fer. • Sce­nario two: par­tial share swop. This en­tails an “as­set-for-share” swop, where a per­cent­age of the SABMiller hold­ings (the pro­posed per­cent­age is 41.6 per­cent) are swopped for shares in AB InBev, a cash ad­just­ment is made for the shares swopped, and share­hold­ers are paid out the bal­ance in cash.

• Sce­nario three: 100-per­cent share swop, and share­hold­ers are paid out for the as­so­ci­ated cash ad­just­ment.

In sce­nar­ios two and three, are share­hold­ers en­ti­tled to roll-over re­lief on the shares swopped? What hap­pens to the cash re­ceived?

In sce­nario two, there is an as­so­ci­ated base cost, be­cause some shares were ef­fec­tively sold (that is, cash was re­ceived for the shares not swopped, and the cash ad­just­ment was re­ceived for the shares swopped). Will all the cash re­ceived be sub­ject to CGT us­ing the base cost for the shares not swopped?

In sce­nario three, there is no as­so­ci­ated base cost, be­cause all the shares were swopped (and not sold for cash). But how will the cash re­ceived for the ad­just­ment be treated: as a cap­i­tal gain or as in­come?

Anthony Smith

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