CHH interim dividend to beat witholding tax

Press, 30 August 1989, Page 38

CHH interim dividend to beat witholding tax

PA Wellington Carter Holt Harvey says it will make an interim payout to beat the October 1 introduction of the 33 percent withholding tax on dividends.

CHH said yesterday it would pay an interim dividend on September 29 for the year to March 31, 1990, of 14% or 7c a share.

The company is the fourth to make an early dividend payment in the past week, with Brierley Investments and Fletcher Challenge acting last Thursday.

Market observers said many other companies issuing final profit figures over the next month are likely to follow their example.

Fletcher Challenge started the trend with the announcement of a second interim dividend of 15.5 c a share, lifting the year’s payout to 27c a share from 25c a share last year. BIL followed with a 5.5 c a share, or 11% final ordinary dividend announcement. Both would be paid by September 29. Reid Farmers announced on Monday it would pay a 3.125 c a share interim dividend on September 27. The dividend, in place of a fullyear payout represents a 25% increase on the previous year’s disbursement. It will have full imputation credits attached.

The chairman of CHH,

Mr Richard Carter, said the move was made in the interests of shareholders in view of the tax change.

The strike price would be announced on September 14.

The dividend and share issue would be taxable and would not carry imputation credits.

Shareholders outside the country would have to pay their own non-resi-dent withholding tax.

The residents withholding tax, to be introduced on October 1, applies to interest income and dividends, with some exceptions for receipts such as interest on trade credits, hire purchase agreements, bonus bonds, and

interest paid on refunds of overpaid tax.

The tax rates will be 24c in the dollar, down from the original 28% proposal, and all payers of interest who deduct the tax will issue an annual statement detailing the amount paid and the tax withheld. The statements will not be needed for payments of less than $2O, but the tax will have to be deducted unless the in-come-earner is specifically exempt. Most dividends, including those paid by investment trusts! will also be subject to the tax at a rate of 33% of the gross dividend, offset by any dividend imputation credits available.