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Tax Statements 2005
Mailing Contents:
Cover Letter
Tax Statement
Cash Reconciliation Sheet
Tax Return Guide
Mailed to all holders who received one or more of the following:
The Westfield Group (WDC) distribution on 28 February 2005
The Westfield Holdings (WSF) dividend on 31 August 2004
The Westfield Trust (WFT) distribution on 31 August 2004
The Westfield America Trust (WFA) distribution on 31 August 2004
The WFA special distribution on 31 August 2004
The WSF/WFT/WFA stapling dividend/distribution on 16 July 2004
The 2005 Tax Statement for the Westfield Group is the first to be issued for the new Group since the Merger, however, it does combine the effect of the pre-Merger distribution paid to investors (in each of Westfield Holdings, Westfield Trust and Westfield America Trust) at the end of August 2004, along with the first Westfield Group distribution paid to investors at the end of February 2005.
Given the change in the structure part of the way through the tax year, this has given rise to additional complexities in the Registry programming for the Tax Statements of a three entity Stapled Security. We have also undertaken extensive testing to ensure the accuracy of the individual Taxation Statements for each securityholder and the allocation between each entity.
Unfortunately, all of these considerations have caused timing delays in the finalisation and despatch of the Tax Statements.
The most significant change has been the Westfield Group Merger which took place in July 2004. As a consequence of this, all investors in Westfield Group have an investment comprising one Westfield Holdings share, one Westfield Trust unit and one Westfield America Trust unit which trade together as one security.
The Merger ratio was as follows:
1 Westfield Holding share = 1 Westfield Group security
1 Westfield Trust unit = 0.28 Westfield Group securities
1 Westfield America Trust unit = 0.15 Westfield Group securities
You will see when you look at the two Dividend/Distribution Statements received during the year that the August 2004 distribution was on a pre-Merger basis (because this related to the six months to 30 June 2004) and the February 2005 distribution (in relation to the six months to December 2004) was on the post-Merger basis.
The information contained in the Tax Return Guide summarises potential taxation aspects of your investment in the Westfield Group for the year ended 30 June 2005. It is based on an assumed set of circumstances which may not necessarily be applicable to you. Accordingly, this information should not be relied upon as taxation or financial advice. If you require further information relating to your personal tax position, we recommend that you contact your accountant or taxation adviser.
There is one named Tax Statement and one named Cash Reconciliation.
Tax Statement – This shows the taxable components of your distributions. Australian resident individuals should use this statement together with the 2005 Tax Return Guide to complete their 2005 tax return.
Cash Reconciliation – This is a summary of your 2004/2005 distributions to assist you in reconciling the cash you were paid to your tax position.
The Tax Statement covers all the dividends/distributions paid to securityholders by Westfield Holdings Limited, Westfield Trust and Westfield America Trust during the period 1 July 2004 to 30 June 2005.
This includes the dividends/distributions paid in August 2004 and the Westfield Groups first distribution paid in February 2005.
The taxable components of these dividends/distributions should be included in your 2005 tax return.
If you were previously a Westfield Holdings investor, you would have used your Dividend Statement to complete your tax return.
Following the Merger, Westfield Holdings shares are stapled to Westfield America
Trust units and Westfield Trust units as part of the Westfield Group. Westfield Group dividends/distributions include dividends/distributions from each entity in the Group. Accordingly, Westfield Group will send you the annual Tax Statement, providing details of all dividends/distributions paid during the year in mid-July each year.
Westfield Trust and Westfield America Trust Distribution Statements do not contain
the taxable components of the distributions, however, estimates of the tax advantaged components are given at that time. We have made clear however that these estimates are not to be used in the completing of your tax return.
The only document that should be used to complete your tax return is the annual Tax Statement which is despatched in July each year following the completion of the tax returns for the members of the Westfield Group.
If you were a Westfield Holdings shareholder prior to the Westfield Group Merger – the non-cash $0.002 per share stapling dividend used to effect the Merger in July 2004 was a fully franked dividend that is assessable income in the June 2005 year.
If you were a Westfield Trust or Westfield America Trust investor prior to the Westfield Group Merger – the non-cash $1.01 per restructured unit stapling distribution used to effect the Westfield Group Merger in July 2004 was a non-taxable return of capital. As these distributions are 100% tax deferred, they are not included in your current year taxable income. However, these distributions will reduce the cost base of your units.
These represent the tax deferred components of the distributions by Westfield Trust and Westfield America Trust. The tax deferred components are largely due to the fact that depreciation on the Group’s property assets is claimed as a deduction for tax, however, it is not expensed in the accounts of the Trusts.
The tax deferred amounts shown on the Tax Statement include the Westfield Trust and Westfield America Trust non-cash stapling distributions. The cash reconciliation shows the cash distributions received and the taxable fully franked Westfield Holdings
stapling dividend.
We have shown the tax deferred components of distributions you received from Westfield Trust and Westfield America Trust on your Tax Statement. These amounts are generally not assessable income in your current tax return, however, the tax deferred amounts reduce the cost base of your respective units in Westfield Trust and Westfield America Trust. If your cost base is reduced to nil, any further tax deferred amounts may be taxable as a capital gain.
Apportionment of Proceeds upon Purchase or Disposal of
Westfield Group Securities
The Westfield Group Stapled Security comprises three separate assets for Australian capital gains tax purposes. Each Stapled Security comprises one share in Westfield Holdings Limited, one unit in Westfield Trust and one unit in Westfield America Trust.
In the Tax Return Guide, we have provided for your records the percentage split of the Net Tangible Assets (NTAs) of the entities in the Westfield Group. You can use this split to apportion both the purchase and sale price of Westfield Group Stapled Securities between the three assets that make up the Stapled Security.
This NTA table will be updated each six months following the release of the Westfield Group financial statements. Access to the updated NTA table is also available at "Taxation Information ".
Westfield Trust Capital Gain
During the year ended 31 December 2004, Westfield Trust made a net capital gain arising primarily from the sale of certain assets to DB RREEF Trust and Stockland Group for
$61 million and $116 million respectively. In accordance with the provisions of the Constitution of the Trust, the Manager of the Trust has determined to retain this capital gain with the net proceeds to be used by the Trust to fund future growth. The net capital gain, however, is part of the taxable income of the Trust for the 2005 year. Accordingly, securityholders are required to include their proportionate share of the net capital gain in their assessable income and this is reflected in your Tax Statement Westfield Trust has elected to treat these capital gains as discount capital gains.
Westfield Holdings Deferred Income
If you held Westfield Holdings shares before the Westfield Group Merger and you participated in the Merger, you may realise a capital gain from the receipt of tax deferred amounts from the Trusts if the tax deferred amounts are greater than the cost base of your units in the Trusts. We recommend that you contact your accountant or taxation adviser on this matter.
The taxation legislation in regard to capital gains is very complex and heavily dependent on individual circumstances. As a result of this we recommend that you should consult your tax adviser or other professional adviser.
The Manager of Westfield Trust has determined to retain the net capital gain made by the Trust. Accordingly, there is no CGT concession amount.
The discount method was selected on the basis that only a relatively small proportion of the Westfield Trust’s investor base are corporates and hence the majority of holders would benefit from the selection of this method.
You can download this from the ATO website or phone the ATO on 13 28 61 for a copy.
In the Westfield Group Half-Yearly Report mailed in October 2005, the information on Cost Base of New Securities as at 30 June 2005 is detailed in a table format on
page 16.
However, for an illustrative example of Apportioning Cost Base to Restructured Westfield Trust Units and Westfield America Trust Units please click on the link Explanatory Memorandum - pg 239-242, and if you would like more information please note the Explanatory Memorandum is available on the Westfield Group website and choose Westfield Group Merger - Explanatory Memorandum.
The information contained in this document is intended to provide general information only and does not take into account the objectives, financial situation or needs of any particular person. The information does not constitute financial product investment advice and should not be relied on as such and, in particular, it is not intended to influence you in making a decision in relation to financial products. If you are in doubt as what you should do, you should consult your taxation, financial or other professional adviser.
