CGT Tax Information on 2011 Entitlement Offer

Section 4.10 of the Retail Offer Booklet for the 2011 Entitlement Offer provided shareholders with information on taxation implications of the Offer.

This page provides further information concerning the cost base of New Shares for holders who exercised their Entitlement arising from BlueScope Steel Shares they had effectively owned prior to 20 September 1985 ("Pre-CGT Shares") - refer to demerger cost base information for more details on whether Shares are Pre-CGT Shares. This page should be read in conjunction with, and uses the same defined terms as, the Retail Offer Booklet.

Sub-section 4.10 of the Retail Offer Booklet includes the following comment concerning exercise of Entitlements:

For Eligible Retail Shareholders who exercise their Entitlements and are allocated New Shares … the New Shares should have a cost base for CGT purposes equal to … where the Eligible Retail Shareholder's existing Shares were acquired (or are taken to be acquired) before 20 September 1985, the sum of the market value of the Entitlements when they were exercised and the Offer Price payable by them for those New Shares plus certain non-deductible incidental costs they incur in acquiring them.

Section 130-40(6) of the Income Tax Assessment Act 1997 covers this topic. During the period the Entitlements could be traded on-market, their market value was their volume weighted average trading price. After this period, a market value of an Entitlement was the market value of BlueScope Steel Shares on the day the Entitlement was exercised, less the $0.40 per share Offer Price. The daily volume weighted average price of ordinary course market trades of Shares could be used as the market value of BlueScope Steel Shares.

The following information is provided to assist you determine the market value of an Entitlement to one new share during the period that Entitlements could be exercised.

We note that the addition to cost base to New Shares for the market value of the Entitlement relating to Pre-CGT shares may not be applicable in a variety of circumstances, including:

• on New Shares allotted in the Entitlement Offer arising from an Entitlement based on Shares that are not Pre-CGT Shares.

This summary is general in nature and is based on the law in force in Australia at 9.00am on 22 November 2011. The precise taxation implications from participating in the Entitlement Offer will depend upon each Eligible Retail Shareholder's specific circumstances. Eligible Retail Shareholders should seek their own independent taxation advice before reaching conclusions as to the possible taxation consequences of the Entitlement Offer.