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Stupid thing Foz is that a few years ago I was meant to be a tax expert!
Those with their shares in w tax efficient wrapper obviously don't need to be concerned. But for others if there is a choice on the tax treatment of the ZNWD shares then people need to understand as the taxation affects not only those shares but the CGT on the BCN shares. I'll shut up now (sighs of relief all round)
Hi John I’m no tax expert and would never give advise. Only advise I’d say get an accountant and let them deal with it!!!
Tomcat there are downsides at play here, depends where we shake out on numbers and I’m not enjoying Chinese rhetorics at the moment.
Foz
Its a type of dividend although in truth its part of the offer for the company. If you read the pages of the offer document that observer842 refers to there is some debate on the taxation treatment, and even advises to consulting a professional advisor.
If taxed as a dividend it would be particularly galling for anyone underwater here at the 67.5p, they could make a substantial capital loss but still face a tax liability because they have received a dividend.
GF to BCN (in May): “We’ll give you 67.5p per share, but you mustn’t pay any dividends before the deal closes.”
BCN to GF (in June and July): “We’re getting lots of complaints about this, sir. Would you please allow us to distribute half a shilling before we sell out?”
GF to BCN (in August): “Well then, you can give away a tanner’s worth of those pesky ZNWD shares. We’ll be getting 30% of them anyway. But only if our deal is accepted by enough to give us 51%.”
BCN to GF (present day): “Thank you, sir. We’ll have to vote on paying ourselves a dividend out of our own property. Hope we get 75% approval. Glad no one gets to vote on your offer.”
what’s the gamble… ganfeng will have a bag of bcn shareholders swag at their disposal… and it’s a big bag… for use in the acquisition process if needed… and we will be notified of ganfeng’s progress in their contracted acquisition of bcn shares along the path to the end… 1st notification threshold is 50% i believe…
John it’s dividend I think?
We are all receiving it including Gf, which to be honest should be giving up their 10% odd as part of the deal.
I think the documents Have been made to imply that Gf are giving us znwd - they aren’t. The bod are and shareholders now are agreeing to distribute znwd and as part of the proposal, I think the documents are to protect distribution of that “dividend” if they take over?
The only caveat in there is about deal becoming “unconditional” so whilst it’s linked to the deal in some regard let’s not act like this is Gf giving us a “bump”. They aren’t and they should have given up their share of znwd also which is pretty petty they haven’t. Maybe technical why can’t on distribution being fair to all shareholders…
I really wouldn’t worry about tax concerns till next year and post outcome.
It’s clear though they have more to give and can give an increase in a cash dividend, does one hit the gamble button….getting tempting!
It seems that because the ZNWD shares are being given as a dividend they could be taxed as income rather than fall under Capital Gains legislation as I described below. The para in the offer document I am referring to is:
The distribution of the Zinnwald Shares could EITHER be seen as a separate distribution to Bacanora
Shareholders (in which case the comments on the expected tax impact on individual or corporate
shareholders are as set out below); or it could be seen as part of the consideration received for the
disposal of Bacanora Shares (in which case the comments on the expected tax impact on individual
or corporate shareholders are as set out above in paragraph 1).
Not sure if you can elect one or the other depending on what is the best calc for you. That sometimes happens in the tax world. Anyone more enlightened than me?
observer
Simultaneous posting!
I will check that out to ensure I haven't given duff info
'r'
Re CGT calc.
On the day that that your BCN shares disappear from your portfolio and ZNWD shares appear you work out the amount of cash you are receiving, A say, and the value pf the ZNWD shares you now own at the market price of ZNWD shares on that day, B say.
Suppose the historical cost of the s104 pool of your BCN shares you have is C (that you should already know this). Then:
Your Capital Gain due to the cash you will receive is A - (C x A/(A+B))
The s104 pool cost for your shiny new ZNWD shares is then C x B/(A+B), which you will need whenever you dispose of them
In other words you split your current acquisition cost into 2 bits because C x A/(A+B) + C x B/(A+B) = C
Appendix 2: TAXATION. Pages 63-65 of the Offer.
Anyone know how we treat this when reporting to HMRC. The 67.5p buy of the BCN shares will result in a Capital gain or loss which is straightforward.
But I'm not sure how the Zinwald distribution is to be reported.
Presumably when you sell them there is a capital gain - but what price per share would you record the as.