Just thought I would bring this up in case there are any SMSF managers on the forums and to get confirmation.
Reading through to the Off-Market Buy Back booklet from BHP that arrived today and pricing the buyback specifically for SMSF(Taxed at 15%) I have come to the conclusion that this BuyBack is just too good to pass up.
Considering that the buyback is offered as a capital component($2.50) and a fully franked dividend component calulated from the Tender Price
Your marginal tax rate 15%
Tender Discount 12%
Assumed Market Price $27.00
Assumed Buy-Back Price $23.76
Fixed capital component $2.50
Deemed dividend component $21.26
Assumed Tax Value $27.69
Cost base (unindexed) $25.00 --------------Average Buy Price
Assumed brokerage fee per Share from on-market sale $0.27
Total after tax proceeds per Share from the Buy-Back $30.17
Total after tax proceeds per Share from on-market sale $26.47
Amount by which after tax proceeds from selling a Share into the Buy-Back exceeds (or is less than) the after tax proceeds from on-market sale
This calculation from the BHP tax calculator
Thus for SMSF there is an opportunity to gain $3.70 per share via the tax implications of the dividend component having purchased at average of $25.
Now if alter you alter the to purchase price to $27 then you still make $3.62 per share by selling at $37 per share.
Remember this is throufgh tax implications of the dividend component and only works for low tax rates (SMSF at 15%).