re: telstra sinking fast!!! special dividend Gyro,
Didn't understand a word of that.
Taxable income is a tax law concept not an accounting one. Further taxable income has nothing to do with distributable surpluses. You can only pay dividends out of retained profits and this writeback will hit those reserves. So if anything, dividend payouts will decrease. The only way Telstra would be able to cheer things up is if they did an on market buyback imho.
An asset writedown will flow through to their P&L (basically Dr. Writedown expense Cr. Investment) but there is no way in hell that Telstra will get a tax deduction for the writedown. If anything, the cost of the writedown will be added back for tax purposes and leave their taxable income, all other things being equal, unchanged - investment writeoffs are not tax deductible in anybody's world.
The writedown will be taken into account in determining their CGT exposure on eventual sale of their investment - if they end up selling (ie a reflection in the market value of the asset).
This is an overly simplistic view of things. What goes for accounting does not necessarily follow for tax.
Cheers
telstra sinking fast!!!, page-24
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