Companies react to dividend tax cut

Reacting to lower federal taxes on dividends, Softchoice Corp. says it plans to give out an annual dividend of 40 cents per share in 2006, payable quarterly. The Toronto-based software firm had been examining strategies to maximize shareholder value, including conversion to an income trust or issuing dividends.

Softchoice chose the dividend option because it will “ avoid expensive conversion costs, return cash to the shareholders and retain the structural flexibility of its current corporate form,” the company said yesterday.

Meanwhile, auto- parts maker Linamar Corp. said it will put off paying its quarterly dividend until the new year to take advantage of the federal tax rules, which would kick in Jan. 1. A number of other companies have recently done the same. Linamar — which makes components for engine, transmission and chassis systems — said a 6 cent per share dividend formerly payable Dec. 13 will be paid Jan. 3.

Earlier, mining giant Teck Cominco Ltd announced a plan to defer payment of a 40- cent- pershare semi- annual dividend until the new year.

Finance Minister Ralph Goodale announced changes to the way dividends received from large Canadian corporations are taxed just before the federal election campaign began. The changes need enactment by whoever forms the government next year.