Share buybacks cost taxpayers

Heavily tax structured share buybacks such as that being currently conducted by St George bank cost the Australian taxpayer $530 million in foregone tax revenue last year. St George which is trading at about $30 is offering shareholders about $25 per share, of which $6.54 is a capital component and the rest is a fully franked dividend, delivering tax advantages especially to those on a low marginal tax rate. A shareholder on the highest tax rate however would be about $4.40 worse off because of the lower value of the franking credit.