Scheme Payments

Folkestone Limited
Scheme of Arrangement and Special Dividend
Class Ruling CR2018/51 – Income Tax

Please refer to Section 8 of the Explanatory Memorandum dated 13 September 2018 for a summary of the Australian taxation consequences for Folkestone shareholders arising from the Scheme. Unless otherwise defined, capitalised terms used below are the same as those used in the Explanatory Memorandum dated 13 September 2018.

Folkestone shareholders are reminded that the taxation summary in Section 8 of the Explanatory Memorandum is general in nature and is not intended to be an authoritative or complete statement of the applicable law. The precise implications of ownership or disposal will depend upon each Folkestone shareholder’s specific circumstances. All Folkestone shareholders are strongly advised to obtain and rely only on their own professional advice on the tax implications based on their own specific circumstances.

Folkestone has received a class ruling from the Australian Taxation Office (ATO) dated 28 November 2018 in respect of the income taxation treatment of the Scheme for Folkestone shareholders (the Ruling). A copy of the Ruling can be found using the following link:

https://www.ato.gov.au/law/view/document?docid=CLR/CR201851/NAT/ATO/00001

The Ruling confirms the taxation treatment of the Scheme for those classes of Folkestone shareholders set out in paragraph 3 of the Ruling. The taxation implications for Folkestone shareholders are in accordance with the summary set out in taxation summary in Section 8 of the Explanatory Memorandum. In particular, the Ruling confirms the capital gains tax implications for Folkestone shareholders arising from the disposal of their Folkestone shares to Charter Hall Limited under the Scheme. The position is summarised below.

Where a Folkestone shareholder receives the Special Dividend of $0.036 per share, their capital proceeds should consist of the Scheme Consideration of $1.39 per share, including the Special Dividend.

In this scenario, where a Folkestone shareholder makes a capital gain in respect of the disposal of their Folkestone shares, the capital gain will be reduced to the extent of the Special Dividend. That is, their capital proceeds will be the Bidder Consideration of $1.354 per share.

Where a Folkestone Shareholder makes a capital loss in respect of the disposal of their Folkestone shares, there will be no adjustment to the amount of the loss for the Special Dividend and their capital proceeds will be the Scheme Consideration of $1.39 per share.