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  • Bonus shares



    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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    Most bonus share issues before 1 July 1987 were paid out of a company's non-taxable capital profits, from asset revaluations or from share premiums. Bonus shares issued in those circumstances are not treated as taxable dividends.

    The paid-up value of most bonus shares issued from 1 July 1987 to 30 June 1998 is taxed as a dividend. The only exception to this rule is where the bonus shares are paid out of a genuine share premium account. In this case the paid-up value of the bonus shares is not treated as a dividend.

    From 1 July 1998, the paid-up value of bonus shares is generally not taxed as a dividend. However, if you received bonus shares on or after 20 September 1985, you may have to pay capital gains tax if you make a capital gain when you dispose of them. For more information see the publication Guide to Capital Gains Tax.

    If you are paid or credited taxable bonus shares the company issuing the shares should provide you with a dividend statement indicating the share value that is subject to tax. It should also advise you when it issues tax-free bonus shares out of a share premium account.

    Last modified: 05 Dec 2006QC 16138