IMHO, the ones that do borrow shares for shorting and the people that lend shares for the purpose of someone shorting them, are professionals and more than likely financial institutions. As such, I have no reasons to believe that they would avoid paying tax if it becomes due and payable.
If they do, then, as you say, they will find themselves in deep water, and having to deal with the ATO. And I do agree fully with you, that they should cop the full brunt of it for trying to do so, while the poor battler is paying for everything else.
Gjcl, my example yesterday was relating to the NAB lending of shares while the AOE takeover was in progress. As such, I have no reason to believe that the NAB, being an Australian Company of course, would try to avoid paying the tax liability they would have accrued by the lending of the shares to a third party.
As I also mentioned the superannuation funds in the same post, which are well reknown for the lending of shares, the same, IMHO, would apply to them. If the superannuation fund was handling this practice as part of a pension fund, there would be no tax payable on any of the lending fees received, if they weren't, then they would have to pay their tax at the applicable rate.
As for the overseas investors that, as you wrote, may short shares, I believe that these people as they are not residents of Australia and living abroad, the tax is payable in the jurisdiction of the Country they do reside in.
But, on the other hand, if they live in Australia, or have a registered office in Australia, and they are classified as Residents of Australia, then the tax will have to be paid here in Australia, and then claimed as a refund in the country that they are considered to be citizen/residents. This usually apply where there is a Double Tax treaty in place and organised between two countries.
Don't forget though that the practice of lending of the shares does not depend/rely solely for the purpose of shorting shares. It is a well known factor that, Companies themselves, at times do borrow shares in order to gain the extra votes they need to get a resolution through when it is obvious to them that they can't get through what they want. From memory, I think it was Leighton's holdings that did that when they wanted to get something through in one of their contract with some highway building company in QLD. They borrowed the shares they needed (and paid million of dollars for it), to get the votes they required to get that resolution through.
Gjcl, I am trying to be helpfull to you and others by simply telling you that we are in the sharemarket and where everything goes. There is no such thing as a level playing field here mate, and greed at most times and cases, takes precedence over anything else. As they say, dog eats dog. There is no if's and but's.
Good luck my friend, and please DYOR.
Buddy
CDU Price at posting:
$3.47 Sentiment: None Disclosure: Held
