How do I record a company demerger (spin-off)?

As a result of a spin-off / de-merger, I have obtained shares in a new company at no cost. How should these 'free' shares be recorded in Sharesight?
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  • At present, company demergers need to be manually recorded in Sharesight. Typically our corporate action data does not include all of the necessary information to record these transactions automatically.

    In general, the approach to recording a demerger is as follows:

    1. Record an 'Adjust Cost Base' adjustment transaction against the original holding to reduce it's cost base to reflect the fact that some of the cost base will now be allocated to the new shares. To do this click 'Enter a new Trade or Adjustment' on the holding page and select the 'Adjust Cost Base' type. A demerger calculator is provided to work out the cost base adjustment if the cost base is to be apportioned by a per-defined ratio. The cost base adjustment will reduce the cost base of the original shares and affect your unrealised capital gain calculation accordingly (typically you would expect that the capital gain increase resulting from cost base adjustment will be offset by a fall in the share price, so the overall capital gain should not change significantly) .


    2. Record any new shares acquired as a new holding under the appropriate share code using an opening balance transaction. Record the quantity and cost base of the new shares obtained (the cost base should match the cost base reduction recorded against the original holding in the previous step). Record the opening balance date based on the date that you acquired the shares.


    Australian customers should note that the above approach assumes that the demerger meets the ATO requirements for rollover relief. Please consult your financial adviser if you are in any way unsure as to the correct tax treatment for your particular situation.

    Please note that the information above is provided for your assistance regarding use of Sharesight and does not constitute specific taxation advice and should not be relied upon as such.
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  • This reply was removed on 2014-04-03.
    see the change log
  • Is there any possibility getting an expansion on this answer, possibly some SS? Im sure im not the first to find it difficult to follow and in my case the method described has not worked.
    I had shares in WDC these were then split into SCG and WFD, if anyone could help with a solution that would be great as its preventing me from using sharesight properly

    Thanks
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    Hi Jarrod,

    Here is an explanation to the WDC split: https://getsatisfaction.com/sharesigh...

    Please let me know if you find it not clear.
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