NRMA buyback opportunity for planners

taxation adviser advice

29 March 2001
| By Jason |

Financial planners are being encouraged to offer advice to large numbers of first time shareholders involved in the share buyback scheme currently underway with the NRMA.

An NRMA spokesperson says the register for the NSW based insurer numbers at more than 1.7 million shareholders, with at least 20 per cent of these as first time shareholders.

The spokesperson says with such large numbers there will be a number of people who will be unsure whether to sell or how to proceed if they choose to do so.

The insurer has priced its shares at around $2.70, with a capital component and franking dividend component and is seeking to buy back up to 148.6 million shares.

NRMA claims the reason for the buy back is to potentially increase return on equity and earnings per share in the future while returning some of the group's surplus capital to shareholders.

NRMA says for those choosing to sell their shares, there are tax benefits that should be explored with an adviser or planner. These include making use of the fully franked dividends component to earn a tax refund.

This compares to selling on the open market which would make the whole sales price a capital component and in some cases, less favourable in terms of taxation.

According to the spokesperson, one adviser is already pointing out to clients that they can sell their shares through the buyback and gain some tax benefits and then repurchase their stock on the open market.

"These are quite complicated issues for most people who don't normally have to work through complex tax concerns," he says.

"If they need help after reading the documents they should consult a planner or adviser, and depending on their situation, receive advice about holding or selling through the buyback or on the open market."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

12 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 17 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 15 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 18 hours ago