Originally Posted by
Snoopy
A rights issue is the way that shareholders contribute capital to a company. It is a capital transaction where you as a shareholder give money to the company to allow ANZ (in this instance) to expand its capital base. It is you as a shareholder giving money to the ANZ, - not the other way around.
The markets may price this 'right', a capital asset to have value, if someone is prepared to pay more than the rights issue execution price. If so, you may sell this 'right', which is I repeat an asset, to another player in the market. In this particular situation, ANZ has offered to act as an intermediary, forwarding on any 'premium obtained' that a third market player was willing to pay for your 'right'. This 'premium money' has not come from ANZ. It has come from the third party market player that bought your rights,
If you are still not convinced, think of it this way. If you had taken up your rights, it would have been you that was giving new capital to the ANZ directly. Are you seriously suggesting that if you contribute new operating capital to a company that you should pay tax on your own capital contribution? I don't disagree with anything you have written in the post I am replying to. But the money you get from selling your rights rather than executing them is not a cash distribution from ANZ. It is cash being paid for an asset (in this case your 'right') on behalf of someone else (the third party that bought your rights).
SNOOPY