john anderson, chairman interview, page-56

Hi Buddy. You are right.... it is as clear as mud these days. Up until June 2010 all we needed to know was if a company was a cat or a dog. Now we need to also know if it's a porcupine before we can work out whether dividends are possible and what the tax implications are.

Cellestis is an interesting case. In the 30 June 2010 Financials it had accumulated losses which threw me with this latest fully franked special dividend announcement in conjunction with the SOA. However it issued a Financial Guidance announcement to the ASX on 7 July indicating an estimated after tax profit in excess of $8 million...... enough to wipe out the losses and cover that dividend. The company auditors must have been working plenty of overtime to stitch the deal together so quickly!

The way these new Section 254T provisions are supposed to work it is possible for ESG to return capital as a special dividend...so you were on the right track all along. In practice I still think it's very unlikely it will happen in the current situation with this SOA proposal.

I wonder how the Law Council of Australia went with it's proposed amendments?

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