Q & A
Tax Information
How do I calculate my annual tax statement?
Your 2011 annual tax statement reflects only the tax components attributable to the 1 July 2010 – 30 June 2011 tax year.
The 2011 APA Group Annual Tax Statement includes:
APT
- the dividends paid to you in September 2010 and March 2011. These dividends are unfranked for tax
- the APT tax deferred capital return paid to you in September 2010 and March 2011.
APTIT
- the APTIT taxable trust income (interest) distribution paid to you in March 2011 and any amount that may be paid to you in September 2011
- the APTIT tax deferred distributions paid to you in September 2010 and March 2011.
When will I receive my annual tax statement?
You will receive your annual tax statement with your final distribution mid September. This will set out all the tax components required for you to complete your income tax return. APA will also provide a Tax Guide to assist you in preparing your income tax return.
How do I complete my tax return?
You should refer to your APA Group Annual Tax Statement and the APA Tax Guide when preparing your income tax return.
Distribution components from APT and APTIT must be separately disclosed in your income tax return. An APTIT distribution comprises both taxable trust income and tax deferred amounts. An APT distribution is an unfranked dividend for tax purposes.
Can I complete my tax return (before I receive the annual tax statement)?
The tax components of APA distributions for the financial year will be disclosed in the annual tax statement mailed with your final distribution mid September 2011.
The final distribution (payment mid September 2011) includes a number of components, some taxable in the 2011 tax year and others in the 2012 tax year. You may do this calculation yourself but all necessary information will be included in the annual tax statement mailed to you.
This means you will be able to complete your tax return in September after you receive your tax statement. Generally income tax returns for individuals are only due at the end of October. APA will also provide a Tax Guide to assist you in preparing your income tax return.
Why can’t my tax statement be prepared earlier?
The actual amount of the final distribution is determined with the audited Full Year results in August. Tax components are also determined at this time. This is consistent with other similarly structured stapled trust securities.
Where can I locate past Tax Return Guides?
2011 Tax Return Guide
2010 Tax Return Guide
2009 Tax Return Guide
Background
Explain the APA stapled structure to me?
An APA Group security comprises a unit in Australian Pipeline Trust (APT) and a unit in APT Investment Trust (APTIT). These units are stapled together to form an APA Group stapled security which is listed on the ASX (ASX Code: APA).
A securityholder cannot deal separately with the individual units comprising an APA stapled security and each unit must have the same distribution record date.
Distribution Information
Why is the record date 30 June but payment not until September for the final distribution?
Having the record date for the final distribution on or before 30 June ensures that securityholders are not effectively taxed on distributions from APTIT at a higher rate than necessary.
APTIT is a pass through trust and as such net taxable income is taxable in the hands of securityholders in the year the income is earned, provided the holder is ‘presently entitled’ to the income at 30 June. Entitlement to the income is deemed to be on the record date.
Where the record date is after the end of the financial year any undistributed income in APTIT is taxed in the hands of the Trustee at a rate (46.5%) that exceeds what would be payable by many securityholders.
To ensure the Trustee does not have to pay the top marginal tax rate, and securityholders benefit from the pass through trust structure, the APA board previously decided to bring forward the record date for all future distributions to the last business day on or before 30 June.
What is the DRP price?
The Dividend Reinvestment Price will be based on the VWAP of APA securities traded on the ASX for the ten Trading Days ending on the fifth Trading Day prior to the date scheduled for payment, less such discount (if any) set from time to time.
Why is APA's distributions per security greater than earnings per security (EPS)? Is APA paying distributions using debt?
APA pays distributions to securityholders from excess operating cash flows that remain in the business after paying all costs (including interest) and maintenance capital costs. APA targets the payout of between 60-70% of operating cash flow to security holders by way of distributions. All remaining cash is retained in the business to support APA's organic growth and investment activities. APA’s board reviews this policy at each distribution date.
Whilst distributions have historically exceeded earnings (profit), they remain well within APA's operating cash flows and therefore remain sustainable going forward. This is primarily the result of the large non-cash accounting cost of depreciation and tax when compared to the low levels of maintenance capex and tax paid (currently nil). As a result, from an accounting sense, distributions are generally taken from net profit after tax plus the excess of depreciation and accounting tax over maintenance capex and cash tax.
Please note that APA’s trust structure allows distribution payments to exceed net profit.