Off-Market Share Buy-Backs and Selective Share Cancellations

The Government released Treasury Laws Amendment (Off-Market Share Buy-Back) Bill 2022 (Exposure draft legislation) on 17 November 2022. The exposure draft legislation proposes to amend the share buy-back provisions in Division 16K of the Income Tax Assessment Act 1936 specifically for listed public companies to align the tax treatment of off-market share buy-backs undertaken by these companies with the tax treatment of on-market share buy-backs. This will ensure that where a listed public company undertakes an off-market share buy-back of shares or non-share equity interests, no part of the purchase price in respect of the buy-back will be taken to be a dividend. 

The amendments also include an additional integrity measure in respect of selective share cancellations by a listed public company.

In response to Treasury’s request for comments, BDO National Tax has prepared a BDO submission.