ATO issues Fact Sheet & Taxpayer Alert covering retail premiums paid on unexercised share entitlements

The Australian Taxation Office (“ATO”) issued a Fact Sheet and Taxpayer Alert (TA 2009/11) on 19 May 2009 dealing with arrangements where a company pays shareholders, who were offered share entitlements which were not taken up and which expired, or who were not offered share entitlements, a retail premium in respect of the amounts subscribed for equivalent shares.

The retail premium is ordinarily the clearance price of the shares (ie what an institutional buyer subscribes for the share) so far as it exceeds the offer price.  Follow the links below to the ATO website for details.

http://www.ato.gov.au/individuals/content.asp?doc=/content/00193183.htm

http://law.ato.gov.au/atolaw/view.htm?Docid=TPA/TA200911/NAT/ATO/00001

Orica conducted capital raisings in 2005 and 2008.

Shareholders who received a retail premium as described above should seek their own tax advice on the Australian taxation treatment of the retail premium in their income tax returns.