BHP Buy Back 2011

[The Bish]

Hi

Just trying to confirm my understanding of th BHP Off Market Buy back 2011.

It appear to me that if your running a SMSF (ie tax rate 15%) then the buy back from a tax perspective looks very good.

The only constraint with that viewpoint is whether or not the fund has capital gains in which to offset the large capital loss that the buy back provides. If you don't have the gains you would nee to carry forward the loss and then potentially lose some of the upside via time value of money over the next year or beyond.

Does anyone have a view on this?


Thanks
The Bish

 

[nellyei]

http://taxcalculator.nextdigital.com/UserInputs.aspx

This helps in working out whether there is a gain per share.

 

[Junior]

Hi

Just trying to confirm my understanding of th BHP Off Market Buy back 2011.

It appear to me that if your running a SMSF (ie tax rate 15%) then the buy back from a tax perspective looks very good.

The only constraint with that viewpoint is whether or not the fund has capital gains in which to offset the large capital loss that the buy back provides. If you don't have the gains you would nee to carry forward the loss and then potentially lose some of the upside via time value of money over the next year or beyond.

Does anyone have a view on this?


Thanks
The Bish

The calculator will give you a good indication as to the potential value of participating. If you have a low cost base on your existing BHP shares, this is a good opportunity to refresh the cost base at the current price, and of course you receive the franking credits.

With regards to SMSF if you are commencing a pension in the near future then CGT doesn't matter as it won't be applicable once in pension phase.

If you are currently drawing a pension the buyback is very valuable as the fund is on a 0% tax rate and would receive a full refund of the tax credits.

 

[nellyei]

the buyback needs to be sent to a controlling participant.

My broker is belldirect.

Does that mean i send it to belldirect?

 

[notabclearning]

BHP Buyback

Hello just wondering about the details of the bhp buy back. Is it a good choice for tax reasons to participate? Whats the main advantage?

 

[BrightGreenGlow]

Yeah this is what I want to know too... why participate in the buy-back if you have to sell at at least a 10% discount? Does this negate CGT?? Seems stupid to sell lower, obviously there is a benefit somewhere but I read through the book and I didn't really make sense of the advantage? I think im better off holding on for another few months to get to the year day of holding and sell off at 50% discount to me CGains.

 

[Risk Chaser]

the vast majority of the backback payment will be fully franked, so in a 0% tax envirnment like pension, the imputation credits will outweigh the discount of the buypack price by atleast 20%.

 

[Junior]

As Riskchaser said, almost the entire payment is a fully franked dividend, which means not only do you sell at a capital loss, you also receive tax credits...If you are a low income earner, or the shares are held in super, there could be a significant benefit which outweighs the discount.

Try using the tax calculator on the BHP website to get an idea of the potential benefit, or speak to your accountant!

 

[Muschu]

I am in the pension phase with my own SMSF.
The small parcel of BHP I have right now [450] are at only about a dollar above the price I paid for them.
Still worth entering the buyback – and if so at what price?
With thanks
Rick

 

[qldfrog]

last week end financial review had a full article on that issue:
pretty hard to loose if you do not pay tax (ie very low income or smsf)
otherwise if taxed, probably not worth
in a nutshelll... and I am not an expert so dyor

 

[kingcarmleo]

How many shares are the buying back?

 

[YELNATS]

I am in the pension phase with my own SMSF.
The small parcel of BHP I have right now [450] are at only about a dollar above the price I paid for them.
Still worth entering the buyback – and if so at what price?
With thanks
Rick

I'm in a similar position in the pension phase of my SMSF. Spoke to my accountant last week and he encouraged me to participate in the buyback which I have done.

Even if you only bought the shares at about $1 cheaper than the current price, you still stand to gain at least $10/share according to the BHP calculator.

Hopefully the scaleback won't be too great and hopefully there will be an opportunity to get back into BHP shares when and if the market dips again.

 

[Logique]

How many shares are the buying back?

They're targeting $5billion worth.

 

[PinguPingu]

I'm assuming that if I'm CHESS sponsored and I've previously recieved dividends to my commsec account that the buyback would be credited to that account? If payment is expected to be completed by today, does that mean it show should up today? Only asking as nothing has appeared in my account and wondering if I should have a winge to CBA yet.

 

[RUSHIAT]

Amount deposited to my bank account 18 April. Comsec transaction account doesn't show any details, only reduced holding in BHP. You would reckon Comsec or BHP would send some paperwork with all the details of capital amount, deemed ATO capital amount, dividend and franking credit, but I haven't received any yet.

 

[Risk Chaser]

Amount deposited to my bank account 18 April. Comsec transaction account doesn't show any details, only reduced holding in BHP. You would reckon Comsec or BHP would send some paperwork with all the details of capital amount, deemed ATO capital amount, dividend and franking credit, but I haven't received any yet.

statements arrived yesterday, melb cbd