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  • Owning shares

    When you own shares, there are tax implications from:

    • receiving dividends
    • participating in a dividend reinvestment plan
    • participating in a bonus share scheme
    • receiving a call payment on a bonus share scheme
    • receiving non-assessable payments
    • transactions the company you have invested in undertakes, such as mergers, takeovers and demergers.

    Tax obligations when owning shares

    The key tax issues you need to be aware are:

    • you need to declare all your dividend income on your tax return, even if you use your dividend to purchase more shares - for example, through a dividend reinvestment plan.
    • the costs you may be able to claim as tax deductions include management fees, specialist journals and interest on money you borrowed to buy the shares.
    • receiving bonus shares can alter the cost base (costs of ownership) of both your original and bonus shares.
    • in some demergers, you may be eligible to choose to rollover any capital gain or capital loss you make. This means you do not report your capital gain or capital loss the year the demerger occurs. Instead, you settle your tax obligations in the year that another CGT event happens to those shares.
    • if you receive a retail premium for rights or entitlements that you didn't take up, you need to declare these premiums as income on your tax return for the year.

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    Last modified: 09 Jun 2015QC 22812