Calculation of Base Cost of Fyffes shares and Total Produce shares

Introduction

Following the disposal by Fyffes plc (‘Fyffes’) of its General Produce division to Total Produce plc (‘Total’), in exchange for the issue of Total shares to the shareholders of Fyffes, the base cost of Fyffes shares must be apportioned accordingly.

Apportionment of Base Cost

For the purpose of computing a gain or loss accruing from the disposal of any part of the ‘new holding’, within the meaning of Section 584 (1) TCA 1997, the total cost of the ‘new holding’ is apportioned on the basis of the respective market values of the Fyffes shares and Total shares after the demerger.

Pursuant to the demerger of the produce division, each Fyffes shareholder received 1 share in Total for each Fyffes share held prior to the transaction. In accordance with the provisions of the Capital Gains Tax Acts, the market value of the Fyffes shares and the Total shares following the demerger are as follows:

Fyffes: €0.96

Total: €0.79

To illustrate the mechanism for determining the base cost of the shares in the event of a future disposal, assume Fyffes shares were originally acquired for €2 each prior to the demerger of the property undertaking to Blackrock International Land plc (‘Blackrock’). Each Fyffes share so acquired was deemed to have a base cost of €1.55 (for further information on this point, please see Tax Briefing, Issue 65).

Revenue will accept that the base cost of Fyffes shares acquired before the Blackrock demerger for €2 and disposed of after the Total demerger is as follows:

Fyffes: €1.55 ×

€0.96

€0.96 + €0.79

= €0.85 per share

Revenue will accept that the base cost of Total shares is as follows:

Total: €1.55 ×

€0.79

€0.96 + €0.79

= €0.70 per share

The percentage split of the base cost between Fyffes and Total is:

Fyffes:

€0.96

€0.96 + €0.79

= 55%

Total:

€0.79

€0.96 + €0.79

= 45%

The cost of Fyffes shares acquired after the Blackrock demerger should be apportioned on this basis.

Summary:

On the basis that a share in Fyffes was originally acquired for €2 prior to the Blackrock and Total demergers and disposed of after the Total demerger, Revenue will accept that the base cost is €0.85.

The base cost of a Fyffes share acquired in the period between the demergers and disposed of after the Total demerger is 55% of the cost of the share.

Any Fyffes shares or Total shares acquired after the Total demerger are not affected.