Question: Is there any chance of explaining the URBO options? Is it best to keep them or sell them?
Answer: The URB options (ASX Code: URBO) give you the right, but not the obligation, to subscribe for another URB Investments Ltd. (URB) share at $1.10. They can be exercised at any time up to 7 April, 2018. To exercise, you contact the registry and make payment of $1.10 per share.
Should you sell?
Well, the options have a value (intrinsic value plus time value). If you are unlikely to exercise (won’t have the cash in the next 12 months or don’t want to increase your exposure), then sell. My guess is that the price of URB won’t do much for some time (partly because of the dilution from options being exercised, but also because it will take time to assemble the portfolio and show evidence of performance).
If you think you might like to increase your exposure, then  hang on. With URBO trading around $0.05, by the time you pay brokerage to sell the options, the return is likely to be reasonably small.
Question: I have recently read Graeme Colley’s articles where he states that it is possible to have a higher cap than $1.6 million on 1 July, if you are the recipient of a defined benefit pension. I am in this category, however, so far I have been unable to find any information on how this will apply. Can you please give me some direction as to where I can find some more information in relation to this and how it will be calculated?
Answer: Thanks for the question.
Yes, it is possible to have a higher cap than $1.6m.
If you are a member of a defined benefit plan, the annual pension is multiplied by a factor of 16. For example, if your annual pension was $120,000, then your transfer balance cap would be $1,920,000. In this situation, your cap would be over $1.6m, but you would not be required to take any action to reduce it.
For a really simple discussion of the treatment, visit the ATO’s website for a discussion on the Transfer Balance Cap here.
For a very technical discussion (and draft ruling), see the ATO’s LCG 2016/D10 here.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
