SuperConcepts executive manager of SMSF technical and private wealth Graeme Colley explained that in November 2016 Ingham’s Chicken undertook an initial public offering with some trustees purchasing these shares around 6 November 2016.
Given that the issue didn’t technically take place till 11 November 2016, this created confusion as to whether the CGT relief could actually be applied to these shares, he explained.
“So people were saying well I can reset the cost base, but the answer is actually that they can’t, because the shares weren’t issued until after 9 November,” he clarified.
While Mr Colley said Ingham’s Chicken is the only IPO that he is aware of where this was a problem, there may be other IPOs that occurred in November 2016 that could likewise be affected.
Correct me if I’m wrong, but wouldn’t the contract date be the date that the shares are applied for? And therefore, CGT relief could apply as the appropriate date for purchase is the contract date, not the settlement date?
I not so sure that comment is technically correct. That is assuming you didn’t enter into a contract to acquire the shares before 9 November. I think the allotment date is irrelevant as you would have entered into an agreement to acquire the shares before 9 November which should be your acquisition date for CGT purposes. Please correct me if i’m wrong.