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  • Appendix 3

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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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    This appendix contains four flowcharts. Download Appendices (PDF, 79KB)This link will download a file here.

    Flowchart 1

    Treatment of bonus shares issued on or after 20 September 1985

    Flowchart 2

    Treatment of bonus units issued on or after 20 September 1985

    Flowchart 3

    Treatment of rights or options to acquire shares or units issued directly to you from a company or trust for no payment (but not under an employee share scheme)

    Flowchart 4

    Treatment of rights or options (to acquire shares or units) that you paid to acquire from a company or trust - or that you acquired from another person (but not under an employee share scheme).

    Flowchart 1: Treatment of bonus shares issued on or after 20 September 1985

    1. Did you acquire the original shares on or after 20 September 1985?

    Yes

    Read on from question 2

    No

    Read on from question 4

    2. Is any part of the bonus shares a dividend or treated as a dividend?

    Yes

    Read on from question 3

    No

    Read answer 1

    3. Were the bonus shares issued before 1 July 1987?

    Yes

    Read answer 1

    No

    Read answer 2

    4. Is any part of the bonus shares a dividend or treated as a dividend?

    Yes

    Read on from question 5

    No

    Read on from question 6

    5. Were the bonus shares issued before 1 July 1987?

    Yes

    Read on from question 6

    No

    Read answer 3

    6. Are the bonus shares partly paid?

    Yes

    Read on from question 7

    No

    Read answer 4

    7. Were the bonus shares issued before 10 December 1986?

    Yes

    Read answer 4

    No

    Read on from question 8

    8. Before the sale of the bonus shares, were any further call payments made to the company?

    Yes

    Read answer 5

    No

    Read answer 4

    Answer 1
    1. The bonus shares are subject to capital gains tax.
    2. The bonus shares are acquired when the original shares were acquired.
    3. The cost base of each original and bonus share is equal to
      • the cost of the original shares divided by the total number of original and bonus shares, plus
      • any calls on partly paid bonus shares.
       
    Answer 2
    1. The bonus shares are subject to capital gains tax if issued on or after 20 September 1985.
    2. The acquisition date of the bonus shares is their date of issue.
    3. The cost base includes the amount of the dividend plus any calls on partly paid bonus shares.
    Answer 3
    1. The bonus shares are subject to capital gains tax if issued on or after 20 September 1985.
    2. The acquisition date of the bonus shares is their date of issue.
    3. The cost base includes the amount of the dividend, plus any calls on partly paid bonus shares.
    Answer 4

    You are taken to have acquired the bonus shares before 20 September 1985 and they are not subject to capital gains tax.

    Answer 5
    1. The bonus shares are subject to capital gains tax.
    2. The acquisition date of the bonus shares is the date when the liability to pay the first call arises.
    3. The cost base is the market value of the bonus shares just before the liability to pay the first call arises, plus the amount of call payments made.

    Flowchart 2: Treatment of bonus units issued on or after 20 September 1985

    1. Did you acquire the original units on or after 20 September 1985?

    Yes

    Read on from question 2

    No

    Read on from question 3

    2. Is any part of the bonus units included in your assessable income?

    Yes

    Read answer 1

    No

    Read answer 2

    3. Is any part of the bonus units included in your assessable income?

    Yes

    Read on from question 4

    No

    Read on from question 5

    4. Were the bonus units issued on or after 20 September 1985?

    Yes

    Read answer 1

    No

    Read answer 4

    5. Are the bonus units partly paid?

    Yes

    Read on from question 6

    No

    Read answer 4

    6. Were the bonus units issued before 10 December 1986?

    Yes

    Read answer 4

    No

    Read on from question 7

    7. Before the sale of the bonus units were any further call payments made to the trust?

    Yes

    Read answer 3

    No

    Read answer 4

    Answer 1
    1. The bonus units are subject to capital gains tax.
    2. The acquisition date of the bonus units is their date of issue.
    3. The cost base includes the amount included in assessable income, plus any calls on partly paid bonus units.
    Answer 2
    1. The bonus units are subject to capital gains tax.
    2. The bonus units are acquired when the original units were acquired.
    3. The cost base of each original and bonus unit is equal to
      • the cost of the original units divided by the total number of original and bonus units, plus
      • any calls on partly paid bonus units.
       
    Answer 3
    1. The bonus units are subject to capital gains tax.
    2. The acquisition date of the bonus units is the date when the liability to pay the first call arises.
    3. The cost base is the market value of the bonus units just before the liability to pay the first call arises, plus the amount of call payments made.
    Answer 4

    You are taken to have acquired the bonus shares before 20 September 1985 and they are not subject to capital gains tax.

    Flowchart 3: Treatment of rights or options to acquire shares or units issued directly to you from a company or trust for no payment

    1. Did you acquire the original shares or units before 20 September 1985?

    Yes

    Read question 2

    No

    The acquisition date of the rights or options is the date of acquisition of the original shares or units.

    Read question 3

    2. Did you exercise the rights or options on or after 20 September 1985?

    Yes

    Read answer 1

    No

    Read answer 2

    3. Did you exercise the rights or options?

    Yes

    Read answer 3

    No

    Read answer 4

    Answer 1
    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of exercise of the rights or options.
    3. The first element of the cost base and the reduced cost base of the shares or units is the sum of
      • the market value of the rights or options at the time you exercise them, plus
      • the amount you pay for the shares or units, plus
      • if the rights or options are exercised on or after 1 July 2001 and, as a result, an amount is included in your assessable income - that amount.
       

    Note: You disregard any capital gain or capital loss you make from exercising the rights or options.

    Answer 2

    You disregard any capital gain or loss on the sale or expiry of the rights or options.

    Answer 3
    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of the exercise.
    3. The first element of the cost base and the reduced cost base of the shares or units is
      • the amount you pay for the shares or units, plus
      • if the rights or options are exercised on or after 1 July 2001 and, as a result, an amount is included in your assessable income - that amount.
       

    Note: You disregard any capital gain or capital loss you make from exercising the rights or options.

    Answer 4

    If the capital proceeds on the sale or expiry of the rights or options are more than their cost base, you make a capital gain.

    If the capital proceeds are less than their reduced cost base, you make a capital loss.

    Flowchart 4: Treatment of rights or options (to acquire shares or units) that you paid to acquire from a company or trust - or that you acquired from another person (but not under an employee share scheme).

    1. Did you acquire the rights or options before 20 September 1985?

    Yes

    Read question 2

    No

    Read question 4

    2. Did you exercise the rights or options?

    Yes

    Read question 3

    No

    Read answer 1

    3. Did you exercise the rights or options on or after 20 September 1985?

    Yes

    Read answer 3

    No

    Read answer 2

    4. Did you exercise the rights or options?

    Yes

    Read answer 4

    No

    Read answer 5

    Answer 1

    You disregard any capital gain or capital loss you make from exercising the rights or options.

    Answer 2

    You disregard any capital gain or capital loss on the shares or units acquired from the exercise of the rights or options because the shares or units were acquired before 20 September 1985.

    Answer 3
    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of exercise of the rights or options.
    3. The first element of the cost base and the reduced cost base of the shares or units is the sum of
      • the market value of the rights or options at the time you exercise them, plus
      • the amount you pay for the shares or units.
       

    If you acquired the rights or options from a person other than the company or trust and exercise them on or after 1 July 2001, your cost base and reduced cost base will also include any amounts included in your assessable income as a result of exercising the right or option.

    Note: You disregard any capital gain or capital loss you make from exercising the rights or options.

    Answer 4
    1. The shares or units acquired on exercise of the rights or options are subject to capital gains tax.
    2. The acquisition date of the shares or units is the date of exercise of the rights or options.
    3. The first element of the cost base and the reduced cost base of the shares or units is the sum of
      • the amount you pay for the rights or options, plus
      • the amount you pay for the shares or units.
       

    If you acquired the rights or options from a person other than the company or trust and exercise them on or after 1 July 2001, your cost base and reduced cost base will also include any amounts included in your assessable income as a result of exercising the right or option.

    Note: You disregard any capital gain or capital loss you make from exercising the rights or options.

    Answer 5

    You may make a capital gain or loss on sale or expiry of the rights or options. This depends on the amount of capital proceeds received.

    Last modified: 09 Apr 2020QC 27596