Tax implications in BHP Share Buy Back

Tax Law: 23 March 2019

Shareholders with BHP shares will be receiving information inviting them to take part in the share buy back. The buy back will be at a discount to the current market value and will consist of 28 cents capital component and the balance a fully franked dividend. This will not suit most shareholders but those who could benefit include:

• Those in low tax tax brackets, such as individuals with taxable incomes under $35,000 (including the buy-back dividend), superannuation funds, particularly if the fund is paying a superannuation pension and tax exempt entities such as Charitable Funds.
• For those holding BHP shares acquired after 19th September 1985 the buy-back is also likely to realise a significant capital loss which can be offset against current or future years' capital gains.

And if you are thinking of going out today and buying some BHP shares you are too late. You will not be entitled to the benefit of the franking credit. This link takes you to a handy calculator.