Under these plans, shareholders can choose to use their dividend to acquire additional shares in the company instead of receiving a cash payment. For CGT purposes, you are treated as if you received a cash dividend and then used it to buy additional shares. Each share (or parcel of shares) received in this way is treated as a separate asset and you must make a separate calculation when you sell them.
More information
For more information about the issues covered in this chapter, including demergers, see the Guide to capital gains tax 2007 and You and your shares 2007 (NAT 2632-6.2007).
See appendix 1 for a list of some major share transactions involving issues covered in this chapter.