Capital Gains
Australian Residents
Holders of ADRs or ordinary shares who are Australian resident individuals or Australian companies, and who are not resident or ordinarily resident in the UK, will not be subject to UK taxation on capital gains realised on the disposal of their ADRs or ordinary shares, unless the ADRs or ordinary shares are used or held for the purposes of a trade, profession or vocation carried on in the UK through a permanent establishment, or the holder is an individual who is temporarily not resident in the UK, as defined by the Taxation of Capital Gains Act 1992.
However, a holder of ADRs or ordinary shares who is an Australian resident will generally recognise a capital gain or loss for Australian income tax purposes on the sale or disposition of ADRs or ordinary shares. The Australian tax rules governing capital gains tax (CGT) on the disposal of shares are complex and depend on the precise circumstances that apply in each case. It is not, therefore, possible to give individual advice to shareowners who are subject to Australian CGT.
The taxable amount of any capital gain realised in respect of such a disposal is broadly determined by reducing the Australian dollar equivalent of the proceeds received on the disposal of the ADRs or ordinary shares by the cost base of the shares (i.e. the original costs of the ADRs or ordinary shares, converted to AUD at the time of acquisition, and indexed for inflation from the date of acquisition up to 21 September 1999).
An Australian capital gain of a corporate shareholder resident in Australia is taxed at the Australian corporate tax rate of 30%.
An Australian capital gain of an individual shareholder resident in Australia is generally taxed at the individual's marginal tax rate. However, individual shareholders resident in Australia may be entitled to a 50% exemption if the ADRs or ordinary shares are held for more than one year. Where the shareholder is a superannuation fund, it may be entitled to a 33.33% exemption if the ADRs or ordinary shares are held for more than one year. When the exemption is applied by a taxpayer, no cost base indexation is available.
Generally, Australian capital gains tax will not apply to shares
acquired before 20 September 1985. However, an Australian taxpayer
may still be subject to Australian income tax in respect of such a
disposal in certain circumstances.
Legislation recently introduced but not yet enacted in Australia
provides for a capital gains tax exemption in respect of the
disposal of shares in a foreign company where the shareholder has
at least a 10% interest in the company. The exemption is prima face
available to Australian shareholders for disposals occurring on or
after 1 July 2004 to the extent to which the company in which the
shares are held carries on an active business.
UK Residents
The UK tax rules governing capital gains tax (CGT) on the disposal of shares are complex and depend on the precise circumstances that apply in each case. It is not, therefore, possible to give individual advice to shareowners who are subject to UK CGT.
For shares held on 31 March 1982 and continuing to be held by shareowners who are resident in the UK for tax purposes and are subject to CGT, the base cost for CGT purposes will normally be the market value of the shares as at 31 March 1982. For shares purchased after this date by shareowners, the base cost will normally be the acquisition costs of the shares.
The value of an ordinary share of 12.5p as at 31 March 1982 was 49.25p, adjusted to reflect the two for one share split in 1999. For shareowners who subscribed for their full entitlement under the rights issues in October 1993 and February 1995, the value per share was 77.535p.
US Residents
Holders of ADRs or ordinary shares who are US resident individuals or US corporations, and who are not resident or ordinarily resident in the UK, will not be subject to UK taxation on capital gains realised on the disposal of their ADRs or ordinary shares, unless the ADRs or ordinary shares are used or held for the purposes of a trade, profession or vocation carried on in the UK through a permanent establishment, or the holder is an individual who is temporarily not resident in the UK, as defined by the Taxation of Chargeable Gains Act 1992.
A holder of ADRs or ordinary shares who is a US citizen or a US resident (as defined above) will generally recognise a gain or loss for US federal income tax purposes on the sale or other disposition of ADRs or ordinary shares in an amount equal to the difference between the US dollar value of the amount realised and the holder's tax basis in the ADRs or ordinary shares. Such gain or loss will be capital gain or loss if the ADRs or ordinary shares are held as capital assets, and will generally be long-term capital gain or loss if the ADRs or ordinary shares were held for more than one year. Any such gain or loss will generally be US-source gain or loss.
The capital gain of a non-corporate United States holder is generally taxed at a maximum rate of 15% where the property is held more than one year. This long-term capital gains rate is scheduled to expire in 2009.
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