Chargeable Gains for Companies Essential Reading Flashcards
When bonus issue shares are issued?
All that happens is that the size of the original holding is increased
What happens since bonus issue shares are issued at no cost?
There is no need to adjust the original cost and there is no operative event for FA 1985 pool
What happens when rights issue shares are issued?
Size of the original holding is increased in same way as for a bonus issue
If the original shareholding was part of FA 1985 pool?
Rights issue shares are added to that pool
Why is right issue shares added to that pool?
A shareholding containing the rights issue shares is sold shortly after the rights issue
What results in an adjustment to the original cost?
New shares are paid for (in a rights issue)
What happens with a rights issue taking place prior to January 2018?
Therefore an operative event in FA 1985 Pool
What is done when calculating the indexation allowance?
Expenditure on a rights issue is taken as being incurred on the date of issue and not the date of original holding
What is done in a reorgansation?
New shares or securities take the place of the original shares.
How is the original cost and indexed cost of original shares apportioned?
is apportioned between different types of capital issued on the reorganisation
Where there is a takeover of shares which qualifies for “paper for paper” treatment?
Cost and indexed cost of original holding is passed ont new holding which take place of the original holding
Why is a reorganisation or takeover not an operative event for the FA 1985 pool?
As the pool of cost is not increased or decreased
When the pool of cost is not increased or decreased
It is not necessary to calculate an indexed rise to date of the takeover
