Following the Federal Budget delivered on 25 October 2022 one of the changes announced by the Government which we would like to highlight to you is in relation to Business tax, with the tax treatment of off-market share buy-backs.
Effective from 25 October 2022 (Budget night) off-market share buy-backs undertaken by Australian listed public companies will be aligned with the current treatment of on-market share buy-backs (in which no part of the share buy-back proceeds is treated as a dividend component).
Currently, when a company undertakes an off-market share buy-back, a shareholder would receive payment consideration usually comprising of a dividend component (which can be franked) and capital proceeds for disposal of their shares. Given the amended tax law the ability to attach franking credits to the dividend component of an off-market share buy-back has been removed.
If you would like any information in regards to undertaking any capital management program, please contact your Client Relationship Manager and they can connect you to our team of Capital Markets industry experts.