Hi, as Central Equity shareholder am trying to calculate value of the taxation benefits of the buyout proposal. Clearly there is some is people are buying at $2.30 today and $2.40 yesterday vs the offer of $2.15 (but $1.68 as franked dividend).
Not my forte so thought I'd ask if I am on right track.
Offer is (per share)
Capital $0.56
Dividend $1.59
Franking Credit (my calc) $0.68
Total (before tax) $2.83
Clearly tax depends on your rate, what you bought at, whtehr you are entitled to Franking Credit (I'll asume we are as does not settle until Jan) and whether Capital Gain is capital or trading.
Given I'm assuming someone buying now have assumed cost of $2.30 and this is on trading account. I'll use 48.5% tax rate
So Tax is
Income -$1.10 (calculated on $1.59 + $0.69)
Capital Gain $0.84 benefit (calculated on $0.56 - $2.30)
So net value of $2.57 for a share bought for $2.30.
If on lower tax rates the benefit is even greater, e.g. at 15% tax rate (i.e. super fund) Income tax is -$0.34 and Capital Gain $0.26 leaving a net value of $2.75.
Am I calculating this right? Clearly it somewhat depends on whether Capital Gains are on capital or Trading account but if buying now for purpose of selling in 3 months this may well be the case.
The reason I ask is comparing selling on market vs to the proposal, if my calculations are right maybe should hold a little to get some of the value!
Cheers
Not my forte so thought I'd ask if I am on right track.
Offer is (per share)
Capital $0.56
Dividend $1.59
Franking Credit (my calc) $0.68
Total (before tax) $2.83
Clearly tax depends on your rate, what you bought at, whtehr you are entitled to Franking Credit (I'll asume we are as does not settle until Jan) and whether Capital Gain is capital or trading.
Given I'm assuming someone buying now have assumed cost of $2.30 and this is on trading account. I'll use 48.5% tax rate
So Tax is
Income -$1.10 (calculated on $1.59 + $0.69)
Capital Gain $0.84 benefit (calculated on $0.56 - $2.30)
So net value of $2.57 for a share bought for $2.30.
If on lower tax rates the benefit is even greater, e.g. at 15% tax rate (i.e. super fund) Income tax is -$0.34 and Capital Gain $0.26 leaving a net value of $2.75.
Am I calculating this right? Clearly it somewhat depends on whether Capital Gains are on capital or Trading account but if buying now for purpose of selling in 3 months this may well be the case.
The reason I ask is comparing selling on market vs to the proposal, if my calculations are right maybe should hold a little to get some of the value!
Cheers
