Telstra 2014 Share Buy-Back

The ATO has issued a fact sheet in relation to the off-market share buy-back that Telstra announced in 2014.

This face sheet provides advice for Australian resident investors who hold their shares on capital account and are subject to the CGT provisions.

Participating shareholders are taken to have disposed of their shares under the Telstra Buy-Bak on 6 October 2014- CGT eventA1.

Break-up of buy-back price

Taxpayers received a payment of $4.60 per share that they sold. This amount consisted of:

• A fully franked dividend of $2.27 per share; and
• A capital component of $2.33* per share.

Note (*): For CGT purposes, participants in the buy-back are deemed to have received $2.77 as the capital component of the buy-back price.

For more details, see Class Ruling (CR 2014/90).

What are the tax consequences of the taxpayer’s participation in the buy-back?

There are two tax consequences:

• Taxpayers must include the dividend and the franking credit in their assessable income for 2014/15; and
• The sale of their shares (to Telstra) is a CGT event that may have resulted in a capital gain (or capital loss).

Ref: ATO website – Capital Gains Tax – Telstra share buy-back