Forum Archive Index - November 2001

["patrick jackson" <trial@clear.net.nz>]

Does anybody have any insight on whether the capital losses that many people suffered as a result of the Waltus re-structuring a few months ago are tax deductible ? Twenty seven property companies were merged into one - now called Urbus - with the shares and fixed interest securities issued individually by the 27 companies marked to market for the purposes of determining the quantity of shares and notes to be received in Urbus. As many of these companies were 'under water', their respective shares and fixed interest securities were marked to market at substantially below issue price.

 

Normally this would not be an issue as all gains/losses from sale or redemption of fixed interest securities are assessable/deductible.

 

However, in the Waltus case, because the shares and fixed interest securities of the individual companies could not be traded separately i.e. they were " stapled ", the IRD may take the convenient view that they were not 'real' fixed interest securities.

 

Joe Royle