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Online Share Trading

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Buy-back

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What is a buy-back - What does it mean? ACL had one today
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4 REPLIES 4
bangbul
Regular Contributor
Normally done to protect share price when expect a drop in earnings. Use of reserves to buy shares on open market, decreasing shares in issue.
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Also has benefits as an alternative to paying dividends, which would be subject to STC. I think, but only think, that share buybacks are tax free - a win/win situation for companies with excess cash.
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You pay CGT on a share buy back
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even if they are taken out of circulation? Not sure I understand how that works, because isn't the capital gain only realized when sold?
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