REG - Leyshon ResourcesLeyshon Energy Ltd - Demerger Tax Cost Base Apportionment <Origin Href="QuoteRef">LENL.L</Origin> <Origin Href="QuoteRef">LRL.AX</Origin>

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06/09/2014 02:41

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RNS Number : 6719L
Leyshon Resources Limited
08 July 2014 
 
LEYSHON RESOURCES LIMITED 
 
8 July 2014 
 
DEMERGER TAX COST BASE APPORTIONMENT 
 
Leyshon Resources Limited (AIM/ASX: LRL) ("Leyshon Resources" or the
"Company") provides the following information to the Company's Shareholders in
relation to the demerger of Leyshon Energy Limited (AIM: LEN) ("Leyshon
Energy") through a return of capital by way of a pro rata in-specie
distribution which was completed on 23 January 2014. On the Record Date of 14
January 2014, Leyshon Resources Shareholders received one share in Leyshon
Energy for each Leyshon Resources share held. 
 
The potential taxation consequences of the distribution are described in
Section 3.15 of the Explanatory Memorandum that accompanied the Notice of
Meeting dated 9 December 2013. The Company has not applied, and does not
intend to apply, for a class ruling from the Australian Tax Office in respect
to the In-Specie Distribution. The purpose of this announcement is to provide
guidance to the Leyshon Resources Shareholders of a reasonable apportionment
of the Capital Gains Tax ("CGT") cost base in their Leyshon Resources shares
between their existing Leyshon Resources shares and their Leyshon Energy
shares acquired through the demerger. 
 
The following summary only applies to Australian resident Shareholders who, as
of the Record Date, held their Shares on capital account for tax purposes, and
not on revenue account, and are not subject to the taxation of financial
arrangements rules in relation to gains and losses on their Shares; and to
non-Australian resident Shareholders who, as of the Record Date, held an
interest in the Company of 10% or more. 
 
Applying Demerger Relief 
 
Australian resident Shareholders who choose demerger relief will ignore any
potential capital gain from the return of capital and apportion the cost base
of their Leyshon Resources shares between those shares and the Leyshon Energy
shares they received. The apportionment is based on a reasonable approximation
of the market values of Leyshon Resources shares and Leyshon Energy shares
just after the in-specie distribution. Leyshon Resources considers that at the
relevant time, the value of Leyshon Energy shares distributed represented
80.29% of the total value of Leyshon Resources and Leyshon Energy shares. This
apportionment has been calculated based on volume weighted average price
(vwap) calculations for the first five trading days for the two entities after
completion of the in specie distribution. The ATO has accepted this
methodology in similar circumstances as outlined in publicly available ATO
Class rulings for similar transactions. 
 
The following examples illustrate the way in which demerger relief would
apply. 
 
Example: 
 
You held 200,000 Leyshon Resources shares at 14 January 2014 for which the
cost base was $20,000 (10 cents per share). 
 
You received 200,000 shares in Leyshon Energy in the distribution. 
 
The cost base of your Leyshon Energy shares will be 80.29% of $20,000, which
is $16,058 or 8.029 cents per share for the Leyshon Energy shares. 
 
The cost base of your Leyshon Resources shares will be reduced to 19.71% of
$20,000, which is $3,942 or 1.971 cents per share for 200,000 Leyshon
Resources shares. 
 
On a future disposal of the Leyshon Energy Shares, certain Shareholders (such
as individuals and complying superannuation funds) may be entitled to a CGT
discount if they have held their Shares for at least 12 months. For these
purposes, Shareholders can treat their Leyshon Energy Shares as having been
acquired on the date that they acquired the corresponding original Leyshon
Resources Shares. 
 
Not Electing Demerger Relief 
 
An Australian resident Shareholder who does not choose demerger roll-over
relief will have the same tax consequences as a Shareholder who does choose
demerger roll-over relief, except that any capital gain arising to the extent
the In-Specie Distribution exceeds the Shareholder's CGT cost base of the
Shares will not be disregarded.  Shareholders may be entitled to discount CGT
treatment.  Shareholders should seek appropriate tax advice to determine the
application of the CGT discount in their specific circumstances. 
 
If the In-Specie Distribution does not exceed the CGT cost base in the Shares,
no capital gain will be made. Shareholders will not make a capital loss as a
result of the return of capital under the Demerger. 
 
Shareholders who are not residents of Australia 
 
Shareholders who are not residents of Australia for income tax purposes will
generally not have any Australian CGT implications under the Demerger, unless
their shares represent "taxable Australian property".  This will generally be
the case where: 
 
(i)           they (together with associates) hold an interest in the Company
of 10% or more at the time of the In-Specie Distribution or for a continuous
period of at least 12 months in the 24 months immediately preceding the
In-Specie Distribution; and 
 
(ii)          certain other conditions relating to the underlying assets of
the Company are satisfied. 
 
As such, if non-resident Shareholders do not hold, or have not held, an
interest in the Company of 10% or more as described above, they should not be
subject to Australian CGT under the Demerger. If they do hold such an
interest, they should consult their tax adviser in relation to whether other
relevant conditions are satisfied as this may result in an Australian CGT
liability. Withholding tax implications have not been considered on the basis
that the entire demerger distribution has been treated as a return of capital
(i.e. no dividend component). 
 
Disclaimer 
 
In the Explanatory Memorandum, Leyshon Resources advised that although it
reasonably expected that capital gains tax demerger relief would apply to the
distribution it could not provide any assurance that demerger relief would
apply. Demerger relief is complex and if you are in any doubt about your tax
position you should seek professional advice. This summary is not intended,
and should not be relied upon, as specific taxation advice to any individual
Shareholder. The comments in this summary are of a general nature only, may
not apply to your specific circumstances, and cannot be relied upon for
accuracy or completeness. This information is provided for the guidance of
shareholders and neither the Company, nor any of its officers or advisers,
accepts liability or responsibility with respect to such consequences or the
reliance by any Shareholder on any part of the summary. 
 
For further information please contact: 
 
Leyshon Resources Limited 
 
Corey Nolan - Managing Director 
 
Tel: +61 7 3221 7770 
 
admin@leyshonresources.com 
 
RFC Ambrian Limited 
 
Samantha Harrison (Nominated Adviser) 
 
Kim Eckhof (Corporate broking) 
 
Tel: +44 (0)203 440 6800 
 
http://www.leyshonresources.com 
 
Leyshon Resources Limited ABN 75 010 482 274 
 
Level 3 / Suite 3, 1292 Hay Street, West Perth 6005, Western Australia 
 
Tel: + 61 8 9321 0077 Fax: + 61 8 9322 4073 
 
This information is provided by RNS
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