Background

360 Capital FM Limited as Responsible Entity for the 360 Capital Total Return Fund (ASX: TOT) successfully completed the scheme of arrangement to acquire all of the ordinary shares in URB Investments Limited (ASX: URB) on 20 December 2019.

Eligible URB shareholders were issued with 0.9833 new TOT stapled securities for each URB share they held on the scheme Record Date (13 December 2019).

URB was removed from the official list of the ASX at the close of trading of 23 December 2019.

Tax Implications

Each stapled security in 360 Capital Total Return Fund (TOT) consists of:

• 1 unit of 360 Capital Active REIT (formerly 360 Capital Total Return Active Fund) (the TOT Active Fund), and
• 1 unit of 360 Capital Passive REIT (formerly 360 Capital Total Return Passive Fund) (the TOT Passive Fund)

The Net Tangible Asset (NTA) breakdown for TOT as at on 19 December 2019, being the date immediately prior to the Implementation Date (Paragraph 19 and 45 of CR 2020/17):

Partial scrip-for-scrip rollover relief is available as confirmed in the same ruling:

16. If you choose scrip for scrip roll-over, the capital gain you made from the disposal of a URB share is disregarded to the extent that you received replacement TOT Active Fund units for the disposal of your URB share (eligible proceeds) (subsection 124-785(1)).

17. The capital gain made from the disposal of a URB share is not disregarded to the extent that you received TOT Passive Fund units for the disposal of your URB share (ineligible proceeds) (subsection 124-790(1)).

The closing price of TOT as at 20 December 2019 was $1.09.

Worked Example

On 1 July 2018, an SMSF has acquired 30,000 shares of URB at $1 per share for $30,000 and the fund elects the partial scrip-for-script relief that is available. 

Step 1: Process the scrip component with rollover relief (TOT Active Fund).

Navigate to Fund Level > Investments > Browse Corporate Actions 

1. Click on Action 
   
   
   
   
2. Click on Update Parcelling
3. Click on Create Target Holdings if necessary
   
   
   
   $30,000 x 16.2% = $4,860 (cost base). 30,000 x 0.9833 x 16.2% = 4,779 units in TOT.
   
   
4. Confirm details and click Submit

Step 2: Process the "in specie" disposal of remaining cost base (without the rollover relief).

Navigate to Fund Level > Investments > Browse Corporate Actions 

1. Click on Action
   
   
   
   
2. Confirm details of the event and click Submit 
   
   $1.09  x (0.9833 x 83.8%) x 30,000 = $26,944.98

Step 3: Process a listed security acquisition of TOT (Passive Fund Component)

Navigate to Fund Level > Transactions > Investment - Buy > Listed Security Acquisition

30,000 x 0.9833 = 29,499; 29,499 - 4,779 = 24,730 units.

Purchase 24,720 units in TOT on 20 Dec 2019 for the same amount calculated in Step 2, i.e. $26,944.98.

Please Note: $26,944.98 / 24,720 = $1.09 per security.

Step 4: Match Step 2 and 3.