Question: A client issued dividend access shares to existing shareholders without telling the tax office. These shares don't give voting rights or entitlement to company assets if it closes. How do they inform the tax office? Does this affect the company's or shareholders' tax returns? When does issuing these shares cause direct value shifting, and what are the consequences?
Answer: Issuing these shares might make existing shares less valuable, which could affect shareholders' cost base (how much they paid for their shares). They don't need to tell the tax office if this is the only result. Shareholders don't need to change their tax returns either; they just need to adjust the cost base of their shares. This doesn't affect the company's taxes. So, they don't need to worry about the company's tax return.
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