That is basically my understanding of, “most efficient way to return capital”, by giving them time to fiddle around to reduce their tax impost.
Unfortunately, the general public is gullible to the mantra pushed by the business communities, such as “best practices” or involving shares “ most efficient way to return capital”.
It is a mantra that amounts to what is beneficial to management in regards to getting their rewards in satisfying the desire of the upper echelon of investors
On-market buybacks simply give the institutions a time frame to dispose of their shares that will maximise their return and avoid paying a higher tax rate.
If a company declares, using the equitable option of paying a return of capital to every shareholders, the institutions would be forced to pay the higher income tax instead of being given fiddling time to rearrange selling shares, resulting in them paying the reduced capital gains tax.
I welcome any comment if my understanding is incorrect!
SUN Price at posting:
$17.08 Sentiment: Hold Disclosure: Held
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