Background

On 1 June 2022, upon the completion of the merger of BHP’s oil and gas portfolio with Woodside, BHP Group (BHP) paid an in specie dividend in the form of Woodside Petroleum Ltd (WDS) which is fully franked.

How it works

BHP shareholders are entitled to one Woodside Share (WDS) for every 5.5340 BHP shares, any fraction will be rounded down to the nearest whole number.

The closing price of Woodside shares on ASX on 31 May 2022 was A$29.76.

The in specie dividend/cost base of WDS is calculated as below:

• Franked Amount = No. of entitled (whole) WDS Shares x $29.76
• Franking Credits = Franked Amount / 7 x 3

Note:

• The Franked Amount is not calculated based on the number of BHP shares.
• Demerger relief is not available according to CR 2022/60.

Example

The fund holds 500 BHP shares as at 24/05/2022.

Number of entitled WDS shares would be equal to 500 / 5.5340 = 90.35 => rounded down to 90 whole units.

The  BHP in specie dividend/the cost base allocated to WDS shares would be:

• Franked Amount = 90 * $29.76 = $2,678.40
• Franking Credits = $2,678.40 / 7 * 3 = $1,147.89

Note:

Even though the Target Cost Base for WDS shows Nil, the cost base will be allocated from the Franked Amount in the corporate action. Please generate Unrealized Capital Gain report which will show the cost base for WDS in details.