Assume instead that the superannuation fund decides to sell its shares under the

off-market buyback, tendering its shares at the maximum of a 14% discount to

the current market price of $5.60. Assume other shareholders adopt the same

policy and the buyback price is set at a 14% discount to $5.60 or approximately

$4.82. What are the after-tax proceeds to the fund if the fund purchased the

share five years ago at a price of $3.80 and the dividend component of the

buyback price is set at $2.90? In this scenario, the capital component is the sale

price of $4.82 less the dividend component of $2.90 or $1.92. However, for

capital gains tax purposes, the deemed capital proceeds from the sale are $5.60

less the dividend component of $2.90 or $2.70.1 Show all working.

Answer rating: 100% (QA)

To calculate the aftertax proceeds to the fund we need to first determine the taxable capital gain T... View the full answer