Bonds market spook traders, page-6

The thought I have is if labor do take away franking credit refunds then TLS is ready for them.  TLS is now spinning off an infrastructure company.  It was  intially conceived that this was because higher P/E ratios are usually behind infrastructure companies and thus spinning off the infrastructure may lead to an increase in S/P.  howeve their may also be another hidden motive and that is if labor do remove franking credit refunds then there is the option that the TLS infrastructure company could be spun off as a stapled security.  Stapled securities are trusts which do not pay corporations tax and as such they distribute to SH's as dividends all the profit margin (the stapled company can retain some ot the margin) and the SH pays the tax on the trust element of this distribution.  As such if you are a SH that pays no tax you will get from the infrastructure trust all their pay out and thus avoid the need for franking credits (this is what REIT do - they pay out all their profits and pay no tax).  As such we could see an interesting situation whereby TLS aviod any penalty they may get (should the likely event of labor being elected occur)  from franking credit refunds to SMSF's below $1.6m and above $800k (for couples)being removed.  Could be a brilliant move to preserve SP value after the election next May.