My general observation on capital losses is that buy back creates more dividend and franking credit compared to the amount of cap losses so it is unlikely to improve net taxable income even if all the losses are offset in the year and don't need to be carried forward.In my example above the buy back creates a loss of 11.35 (22.69-11.34) compared to selling on market (ignoring brokerage and any tax value adjustments). So while we reduce capital gains by 11.35 (or less if gains are insufficient or are discounted). This reduction will be more than offset by dividends and franking credits.
Net taxable income change
Dividend 8.17
Franking Credit 3.5
Capital losses -11.35 (best case)
Net income +0.32
More likely it will increase taxable income. Also consider that some of the gains may be eligible for 50% discount. Everyone should do the calcs in their individual situation but in general the buy backs are designed to benefit tax advantaged people who pay no or little tax and can claim back franking credits.
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$27.47 |
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