Originally Posted by
Muse
You are on the right track.
In order to attach imputation credits, you must have paid tax / have tax paid income.
ALF is sitting on a massive pile of tax losses. Therefore, there is no tax to pay on its profit before tax, and thus can't attach imputation credits.
That doesn't stop the company from paying unimputed dividends. They are free to do so. Many do.
But the existence of those tax losses also provide a financial incentive for the company to potentially grow by acquisition, using sensible amounts of debt, as the cashflow from its operations will be quite strong (given it doesn't have to pay tax) and it can use those strong cashflows to quickly paydown any debt. I suspect that is why WAF has bought in. The nature of ALF's rural land management business is quite cashflow positive as well.