A tax loophole used by some of Australia’s largest companies, including BHP and the big banks, will be shut down for off-market share buybacks to stop the “streaming” of franked dividends to shareholders under a measure estimated to raise $550 million.
The surprise budget announcement will stop a tax-effective return of capital to shareholders under a strategy that has been pushed by institutional shareholders, including big superannuation funds, to maximise cashing in on franking credits and limiting their capital gains tax.
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John Kehoe is economics editor at Parliament House, Canberra. He writes on economics, politics and business. John was Washington correspondent covering Donald Trump’s first election. He joined the Financial Review in 2008 from Treasury. Connect with John on Twitter. Email John at jkehoe@afr.com
