tax implications from sale of assets to slr?, page-4

Jul - you can be thankful you sold your SLR shares when you did. At least you might have some spare cash put aside to pay the tax owing on the unfranked dividend. For those who have held onto their SLR shares it accentuates how bad the deal and treatment of shareholders has become.

I am no accountant, but I am led to believe that PRH Directors had a choice how to treat the in-specie transfer on their balance sheet. They could have and probably ethically should have "paid" the dividend out of the Share Capital Account but they contrived to use it as additional accumulated Losses. As if they did not have enough accumulated losses up their sleeve carried forward into the Tundra Gold enterprise. Ironically this scheme looks doomed to fail anyway and perhaps will never get the opportunity to take up any tax benefits carried forward.

Clearly the PRH "Assets held for Sale" were capital items generated over the years from share capital (not profits)and any consideration from this sale should have been returned direct to share holders. This would have to have been the case if PRH was wound up which in truth is what really occurred when it was fundamentally stripped of all it assets.

It makes me wonder if the originally planned merger was shelved when some bright sparked realised that a potentially better outcome from a taxation perspective could be achieved by a straight asset sale? The reason for pulling out of the merger may have been a furphy!

So were the PRH Directors acting in the best interests of their shareholders or simply looking at contriving ways and means of adding value to the PRH shell.

As I said my knowledge of corporate accounting practices is naive at best and even if PRH has acted without the shareholders best interests the ATO does not care too hoots about what is ethically right or wrong as they do not make rulings on Corporate Law. If PRH say it's an unfranked dividend then it is!