Ann: CBA announces $6 billion off-market share buy-back, page-29

''it's a funny take on franking credits to think they might be immoral or unfair. You think it is a more moral or fair tax scenario for the govt to tax 30% at the company level and then tax the investor on top of that?There is also a good argument to be had about the franking credits paid out as a rebate to low tax payers given all taxpayers got a tax reduction when GST was introduced at the same time in 1987- except of course pensioners or people on a low tax rate which was one of the rationale for the introduction. It's an easy political football to get headlines but a lot more complex.''
It is complex , there are a lot of posts under my name before the last election on this very subject arguing against labor's policy, however , that is not we are discussing now.

"I don't know that it's immoral or unfair"

I think you both have not understood what I am getting at.
These franking credits have value for all shareholders , they are being given away to a select group.
Imagine a scenario where a company has a number of lean years , pays no tax .
Runs out of franking credits , dividends then have to be unfranked .
Now imagine if that company had blown a heap of credits a couple of years before in a buyback which really only provided benefits to a select group of shareholders.

A special dividend , to all shareholders is a much fairer way of dealing with the excess cash and franking credits.
The sop that is given that you benefit by less shares in the company if you dont sell shares into the buyback, laughable.
So , what does that tell you about divi reinvests?


I will happily avail myself of the opportunity , again and again , to make money by selling into such buy-backs.
If other shareholders are dumb enough to allow it , I wont knock it back.

As far as it being ''payback time'' , it most certainly is .
But lets not fool ourselves it is completely deserved.
Just be thankful they are not bright enough ,or organised enough, to rein us in.