• Bonus units issued where no amount is included in assessable income

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    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    If you did not include any amount in your assessable income for the issue of units, the acquisition date of the bonus units is the date you acquired the original units to which they relate. This means that if you acquired the original units before 20 September 1985, the acquisition date of the bonus units is the date when you acquired the original units. Therefore, any capital gain or capital loss you make when you dispose of the bonus units is disregarded.

    An exception to this rule is where you acquired the original units before 20 September 1985 but you are obliged to pay a further amount either when the bonus units are issued or later. This exception applies only to bonus units issued on or after 10 December 1986. If you have made any further payments, the bonus units are treated as having been acquired when the liability to make the first additional payment arose. As a result, they may be subject to capital gains tax. The cost base of the bonus units includes their market value immediately before the liability to make the further payment arose, plus any further amount that you have paid or are liable to pay.

    The cost base of non-assessable bonus units issued for original units acquired on or after 20 September 1985 is calculated by apportioning the amounts paid for the original units between the original units and the bonus units. This results in a reduction of the cost base of the original units.

    Example

    Unit trusts

    Sarah is a unit holder in the CPA Unit Trust. She bought 1,000 units on 1 September 1985 for $1 each and 1,000 units on 1 July 1996 for $2 each. On 1 March 1997, the unit trust made a one-for-one bonus unit issue to all unit holders. Sarah received 2,000 new units. She did not include any amount in her assessable income as a result.

    The 1,000 new units issued for the original units she acquired on 1 September 1985 are also treated as having been acquired on that date and are therefore not subject to capital gains tax.

    However, the 1,000 new units issued for the original units she acquired on 1 July 1996 are subject to capital gains tax. Their cost base is worked out by spreading the cost of the original units ($2,000) acquired on that date over both the original and bonus units. Each of the units therefore has a cost base of $1.

    Last modified: 18 Sep 2009QC 18323