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Two aboriginal groups lose their court bid to block a ruling on Shell’s (RDS.A, RDS.B)...

Two aboriginal groups lose their court bid to block a ruling on Shell’s (RDS.A, RDS.B) Jackpine oilsands mine expansion in Alberta. They had asked the Alberta Court of Appeal to force a regulatory board to make a ruling on whether they had been adequately consulted on the project, but the court said the board was within its rights to refuse to deal with consultation.
Comments (5)
  • hblair7
    , contributor
    Comments (39) | Send Message
     
    For a taxable account should I buy the A or B share---what is the difference in the dividend for these shares? Thanks for your help---
    27 Nov 2012, 01:23 PM Reply Like
  • Rick D
    , contributor
    Comments (325) | Send Message
     
    Generally speaking, US investors in taxable accounts should buy A shares.

     

    The shares are identical in most material respects except that A shares are Dutch shares and are subject to 15% Dutch withholding tax on dividends, unless those dividends are reinvested through Shell's Scrip Dividend Programme. (Ask your broker if they participate in this program if this is an issue for you.) B shares are British shares and have no withholding on dividends.

     

    Most (but not all) taxpayers owning RDS.A in taxable accounts can reclaim the full amount of Dutch withholding tax as a foreign tax credit on their tax return, which effectively eliminates the withholding tax. You should not be deterred by the process for reclaiming the Dutch tax as the foreign tax credit is easily claimed, either as a single line entry on your 1040 or as a very simple tax form (Form 1116).

     

    The reason for preferring A shares in a taxable account is that the shares are slightly cheaper so you can buy a few more shares for a given dollar amount. As long as you can fully reclaim the Dutch withholding tax, there is no disadvantage to the A shares, so you might as well take advantage of the lower share price.

     

    There are a few very limited circumstances in which the foreign tax paid cannot be fully reclaimed. I am not a tax advisor and cannot examine your specific situation. If you are making a large investment in Shell, a consultation with a tax advisor might be warranted. If you are making a small or medium-size investment, the low probability and low cost of a possible error probably don't justify the tax advisor's fee. In this case, I'd just buy the A shares and not worry about it.

     

    You specifically asked about a taxable account, but should you invest in a tax-deferred or tax-exempt account, you should buy B shares unless you are reinvesting dividends through the Scrip Dividend Programme. This is because these account types cannot claim the foreign tax credit.

     

    I hope this helps.
    28 Nov 2012, 12:51 AM Reply Like
  • hblair7
    , contributor
    Comments (39) | Send Message
     
    Rick D

     

    Many thanks for your detailed answere to my question---It's a big help --- one last question---I reinvest all dividends----with the A shares I would loose out on reinvesting 15% of the dividends? would be buying 1000 shares on line---just use the broker to process the order--for me to be able to reinvest I would need to sign up for Shells program ?
    Can I do that myself?
    Many thanks again for your help.
    Hugh
    28 Nov 2012, 07:52 AM Reply Like
  • Rick D
    , contributor
    Comments (325) | Send Message
     
    If you reinvest dividends through Shell's Scrip Dividend Programme you will not lose out on anything because nothing will be withheld.

     

    I use Vanguard Brokerage. If you sign up with them to reinvest dividends, they will automatically sign you up in the Scrip Dividend Programme. I cannot speak for any other brokerage. Call your brokerage and ask them.
    28 Nov 2012, 12:52 PM Reply Like
  • hblair7
    , contributor
    Comments (39) | Send Message
     
    Thank you ---I spoke with broker and the Script Dividend does as you said it would----when the shares are sold at a latter date there is no
    Dutch tax imposed on the dividend shares---
    Good luck
    28 Nov 2012, 06:20 PM Reply Like
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