McMillan cuts dividend

Group withholds payments due to uncertainty over fringe benefits changes.

A company in line to be hit by proposed changes to fringe benefit tax (FBT) has withheld payments to its shareholders because of the uncertainty caused by the federal government's election promise.

McMillan Shakespeare has already been hit by Labor's plan to tighten FBT guidelines on car leasing and salary-sacrifice packaging, with its market value more than halving in the days after the July announcement by Prime Minister Kevin Rudd.

Its share price has since recovered some ground, and on Tuesday the company said it made a profit of $62 million in the 2012/13 financial year, up 15% from the previous year.

But it will not pay a final dividend to shareholders because of the uncertainty caused by the proposed FBT changes, it said.

McMillan Shakespeare paid a final dividend of 25 cents per share 12 months ago, or $31.4 million.

The company provides salary packaging and settles car leases, as as well as financing for cars and other equipment.

"The Labor government's surprise announcement on FBT on motor vehicles is having an adverse affect on our business, at least in the short term," McMillan Shakespeare said on Tuesday.

"If the coalition wins the election, it would appear from their policy statements, we should be able to move back to business as usual.

"In the meantime, we will work hard to convince Labor to change its mind."

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