Sell Back Rights

High Court Decision on St.George Bank sell back rights

In February 2001, St.George granted ‘Sell Back Rights’ to its shareholders to effect an off-market buy-back of its ordinary shares. The Australian Taxation Office (ATO) subsequently issued a Class Ruling saying that shareholders who received Sell Back Rights would be liable to income tax on the market value of the Sell Back Rights. St.George disagreed with the ATO Class Ruling, and funded litigation on behalf of affected shareholders to challenge the Class Ruling.

The first hearing on this matter was held in the Federal Court on 30 October 2003. The Federal Court at first instance decided that affected shareholders should not be taxed on the value of the Sell Back Rights. On 5 May 2004, the Commissioner of Taxation lodged an appeal to the Full Federal Court against the decision. On 8 August 2005, the Full Federal Court upheld the original decision that the affected shareholders should not be taxed on the value of the Sell Back Rights.

The High Court subsequently granted the Commissioner of Taxation leave to appeal.

On 22 February 2007, the High Court allowed the ATO’s appeal. It held that participating St.George shareholders should be taxed on the value of the sell-back rights granted to them in the 2001 year of income. The value of the sell-back rights ($1.89 per sell-back right) is to be regarded as ordinary income. This is the final decision in relation to this matter.

At the time the ATO issued its Class Ruling, St George advised shareholders to act in accordance with the Ruling, by including the market value of the sell-back rights as assessable income in their 2001 income tax return, pending a final court decision. If shareholders followed that advice, they would not be required to do anything further as a result of the High Court’s decision.

Although disappointed with the ultimate outcome of this case, St.George is pleased that it defended the interests of shareholders throughout these proceedings.

Shareholders should direct their enquiries to the ATO on telephone 13 2861. The ATO will also be establishing a page on its website (www.ato.gov.au) in relation to the High Court’s decision.

For further information, please read Frequently Asked Questions.

Sell Back Rights - High Court Decision (PDF, 27Kb)

Chair's Letter (PDF, 35Kb)

Treatment of Sell Back Rights in 2000–2001 Tax Return

Shareholders holdings St.George Bank shares on 23 January 2001 (Record Date shareholders) have been sent the following taxation information depending on how they dealt with their Sell Back Rights.

For Record Date Shareholders who DID NOTHING with their Sell Back Rights (i.e. did not elect to exercise them or have them transferred):

Tax Return Disclosure (PDF, 10Kb)
ATO Letters (PDF, 12Kb)

For Record Date Shareholders who EXERCISED their Sell Back Rights (i.e. sold shares back to St.George):

Tax Return Disclosure (PDF, 101Kb)
ATO Letters (PDF, 65Kb)

For Record Date Shareholders who had their Sell Back Rights TRANSFERRED to them:

Tax Return Disclosure (PDF, 102Kb)
ATO Letters (PDF, 69Kb)

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