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Well said!
----- Original Message -----
Sent: Thursday, November 27, 2003 3:11
PM
Subject: [sharechat] Disgraceful Service,
BK Registries and TLS
I comment on the Telstra Buy Back tender offer document
that was
sent to NZ shareholders by BK registries early this
month. There was
very little information on the tax
consequences for NZ shareholders
accepting this offer.
The advice
offered in bold print on p16
"It is therefore important that you seek
professional tax advice to take
into account your personal
circumstances"
while undoubtedly correct, falls far short of the
standard of advice I
would expect from such a document (for NZ
shareholders).
Particularly so, when the advice offered
to Australian shareholders is
so detailed.
The major point of
contention I have with the buyback offer document
is that nowhere does it
mention that the decision to structure the
payout in the form of
$1.50 of capital value plus approximately $3.30
as a franked distribution
means the franked distribution part is
technically taxable in the hands of
New Zealand shareholders. In fact
the offer document
suggests the opposite, as on p18 it says
"A non-resident shareholder
will not be liable to Australian witholding
tax on any part of the
buy-back price,"
Unfortunately, just because the tax is 'not withheld'
does not mean that
the tax is 'not eventually payable'.
If the same
shareholders that accepted this offer had sold their shares
'on market'
there would be legally no tax to pay at all. And who
would be better off?
Putting some numbers on it, let's
say you had 1000 Telstra shares and
had sold them on market at $A4.80
(around $NZ5.40). This would net
you $A4800- , net say 1% brokerage
which gives you $A4752 'after
tax' (this transaction being zero
rated for tax).
By contrast if you had tendered your shares to Telstra
at $A5.40 (the
highest price you could), and it was accepted, then you
would receive
a capital repayment of $A1500, and a franked (taxable)
payment of
$A3,900. Based on the lowest 19% marginal tax
rate, this would
deliver the NZ shareholder a net $A3,159. Add
that to the capital
proceeds of $A1500 and you end up with
$A4,659. Note that if your
marginal tax rate is higher than
19% then you would be *significantly
worse off* than this!
In
summary, sell on market and get $A4,752. Sell to buyback offer
and get $A4,659 (best possible case). This highlights
what is so
disgraceful about this offer document.
Every New Zealand
shareholder with a marketable parcel of TLS
shares is, without exception,
whether they be an individual, company
or trust, *worse off* if they
accept the Telstra offer! This offer is
appalling
for 99% of NZ shareholders even in the very best case
scenario! I guess legally the offer had to be sent out to all
shareholders. But I would have expected a covering note to NZ
shareholders warning them not to take it up, and sell their shares on
market instead if they wanted out. Given that I imagine most
TLS
shareholders on the NZ register are indeed New Zealanders, the
omission of such warning documentation I would class as
unforgiveable.
BK Registries and Telstra NZ, I cannot recall a case
of any NZ
company/registry offering such appalling and misleading service
to
their own shareholders . I just hope that no New
Zealand
shareholders were 'sucked in' by this scandalous
offer.
SNOOPY
discl: still hold
TLS
--
Message sent by Snoopy
on Pegasus Mail version
4.02
----------------------------------
"Dogs have big tongues, so you
can bet they don't
bite them by
accident"
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