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Whats the benefit of Woolies (WOW) off market buy back?

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Whats the benefit of Woolies (WOW) off market buy back?

Hi James, Would appreciate some feedback on the Woolworths off market buy back. I had originally 2000 shares of which Woolworths purchased 523..I operate a SMSF in pension phase and do not pay any tax on same. The shares closed on Monday at $40.42,with the buyback price being $34.46 ( Capital component $4.31 ), and Dividend component of $30.15. Could you please advise the net benefit of same based on the 523 shares purchased. Regards John

Answer

Hi John,

The key is to determine the franking benefit on the dividend. To easily do that, simply divide the dividend component by 0.7 then add back in the capital component which equates to $47.38. If a holder was paying 15% tax for instance, the calculation would be dividing the fully franked dividend by 0.85 making the process very marginal excluding any capital gains relief. Please note, these are general calculations only, Market Matters does not provide tax advice nor personal financial advice.

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