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  • Obtaining shares

    You can obtain shares through:

    • buying them
    • inheriting them
    • being given them (receiving them as a gift)
    • them being transferred to you as the result of a marriage or relationship breakdown
    • an employee share scheme
    • a conversion of notes to shares
    • demutualisation of an insurance company with which you have a policy
    • bonus share schemes of companies in which you hold shares
    • dividend reinvestment plans of companies in which you hold shares
    • mergers, takeovers and demergers of companies in which you hold shares.

    Tax obligations when obtaining shares

    The key tax issues you need to be aware of are:

    • Generally, you can only declare your dividends and claim your expenses if your name is on the share purchase order.
    • If you hold a policy in an insurance company that demutualises, you may be subject to capital gains tax either at the time of the demutualisation or when you sell your shares.
    • Even if you didn't pay anything for your shares, you should find out the market value at the time you obtain them - otherwise, you may pay more tax than necessary when you dispose of them.
    • You can't claim a deduction for some costs related to purchasing your shares, such as brokerage fees and stamp duty, but you can include them in the cost base (cost of ownership - which you deduct from what you receive when you dispose of the shares) to work out your capital gain or capital loss.
    • You need to keep proof of all your share transactions from the beginning to ensure you can claim everything you're entitled to, otherwise you pay more tax than you would otherwise need to.
    • In some circumstances, you may be considered the owner of shares even if they were purchased in your child's name.
    • Next steps:

    • Owning shares
    • Disposing of shares

    See also:

    Last modified: 09 Jun 2015QC 22811