In October 2006, Henderson Group returned approximately £200 million surplus capital to shareholders. Shareholders had 22 in every 100 shares or CDIs held on the Record Date (13 October 2006) cancelled in exchange for a cash payment of 78 pence per share. The Return of Cash was approved by shareholders at an Extraordinary General Meeting (EGM) held on 31 August 2006 and received UK Court approval on 4 October 2006.
Taxation
For information on the tax implications of the Return of Cash, follow the link below.
You can also visit www.hmrc.gov.uk (UK residents), www.ato.gov.au (Australian residents) or www.ird.govt.nz (New Zealand residents).
UK shareholders
HM Revenue & Customs (HMRC) confirmed that, in accordance with the commentary set out in the Circular and Notice of EGM (page 7), it would accept calculations using 58 pence as the capital element of the payment in respect of the cancellation of shares under the Return of Cash transaction in October 2006. HMRC said that it would also accept other calculations, according to shareholders' individual circumstances.
Australian shareholders
In 2006 the Australian Taxation Office (ATO) issued a Class Ruling (CR 2006/123) regarding the treatment of the cancellation of Ordinary Shares/CDIs and the associated consideration.
The key elements of the original Class Ruling were as follows:
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The Return of Cash is not a ‘dividend’.
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The cancellation of shares constitutes a capital gains tax (CGT) event.
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CDI holders are taken to have received A$2.38 as the capital proceeds for each cancelled share. Note that this differs from the A$1.931787 for each cancelled share paid to CDI holders on 26 October 2006.
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To the extent that the deemed capital proceeds (A$2.38 per share) exceeded the cost base of the cancelled shares, a capital gain resulted. CDI holders who received their shares in December 2003 on the demerger from AMP have a cost base of A$1.73 per share.
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To the extent that the deemed capital proceeds (A$2.38 per share) were less than the cost base of the cancelled shares, a capital loss arose.
The original Class Ruling was amended in September 2008 such that the key elements are now:
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The Return of Cash is not a 'dividend'.
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The cancellation of shares constitutes a capital gains tax (CGT) event.
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CDI holders are taken to have received A$1.931787 as the capital proceeds for each cancelled share. Note that this is the amount for each cancelled share paid to CDI holders on 26 October 2006.
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To the extent that the deemed capital proceeds (A$1.931787 per share) exceeded the cost base of the cancelled shares, a capital gain resulted. CDI holders who received their shares in December 2003 on the demerger from AMP have a cost base of A$1.73 per share.
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To the extent that the deemed capital proceeds (A$1.931787 per share) were less than the cost base of the cancelled shares, a capital loss arose.
Information from the ATO on the amended capital gains tax consequences of the Return of Cash is available at the link below.
If you have any queries regarding this ruling, please contact your tax adviser or the ATO.