Non-share dividends

Non-share dividends are received by those who hold non-share equity interests in an entity.

Equity interests are defined in section 974-75 of the ITAA 1997. An equity interest in a company that is not, in legal form, solely a share in the capital of the company or stock in the company, is called a non-share equity interest.

A payment to a non-share equity interest holder that corresponds to a dividend paid to a shareholder is treated in the same way as a frankable distribution.

Example: Non-share dividend

An example of a non-share dividend would be distribution paid out of retained profits for a convertible note that is an equity interest.

End of example

Under the debt/equity rules, certain interests which are not shares in legal form, are treated in a similar way to shares for some tax law purposes. These interests are called non-share equity interests.

Examples of non-share equity would be some income securities and some stapled securities.

Find out more

For more information, read our Debt and equity tests: guide to debt and equity tests which provides an overview of the debt/equity rules and explains what a non-share equity interest is.

End of find out more
    Last modified: 09 Jul 2014QC 17505