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Class Ruling

CR 2026/85

Mirrabooka Investments Ltd - bonus shares issued under Dividend Substitution Share Plan

  • Please note that the PDF version is the authorised version of this ruling.

Table of Contents Paragraph
What this Ruling is about
Who this Ruling applies to
When this Ruling applies
Ruling
7
Scheme
14
Appendix – Explanation
26

  Relying on this Ruling

This publication (excluding appendix) is a public ruling for the purposes of the Taxation Administration Act 1953.

If this Ruling applies to you, and you correctly rely on it, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling.

What this Ruling is about

1. This Ruling sets out the income tax consequences for shareholders of Mirrabooka Investments Ltd (Mirrabooka) who choose to receive bonus shares in lieu of dividends under the Dividend Substitution Share Plan (DSSP) offered by Mirrabooka.

2. Details of this scheme are set out in paragraphs 14 to 25 of this Ruling.

3. All legislative references in this Ruling are to the Income Tax Assessment Act 1936, unless otherwise indicated.

Who this Ruling applies to

4. This Ruling applies to you if you:

•
are a 'resident of Australia' as defined in subsection 6(1)
•
are eligible and elect to participate in the DSSP
•
are listed on the share register of Mirrabooka as at the record date for a dividend
•
receive fully paid ordinary shares in Mirrabooka in lieu of dividends under the DSSP (bonus shares), and
•
hold your Mirrabooka shares on capital account – that is, your Mirrabooka shares are neither held as 'revenue assets' (as defined in section 977-50 of the Income Tax Assessment Act 1997 (ITAA 1997)) nor as 'trading stock' (as defined in subsection 995-1(1) of the ITAA 1997).

5. This Ruling does not apply to anyone who is subject to the taxation of financial arrangements rules in Division 230 of the ITAA 1997 in relation to the scheme outlined in paragraphs 14 to 25 of this Ruling.

Note: Division 230 of the ITAA 1997 will not apply to individuals unless they have made an election for it to apply.

When this Ruling applies

6. This Ruling applies from 1 July 2025 to 30 June 2029.

Ruling

Bonus shares are not dividends

7. The bonus shares issued to you under the DSSP are not dividends as defined in subsection 6(1) and will not be taken to be dividends under subsection 6BA(5).

8. If you choose to participate in the DSSP and are issued with bonus shares under the DSSP, and if Mirrabooka does not credit its share capital account in connection with the issue of those bonus shares, the bonus shares will not be taken to be dividends that are included in your assessable income under section 44 (subsections 6BA(5) and (6)).

Specific anti-avoidance provisions do not apply

9. Section 45 will not apply in respect of the issue of bonus shares, as it is not the case that bonus shares are received by certain shareholders while other shareholders receive minimally franked dividends (as defined in subsection 45(3)).

10. The Commissioner will not make a determination under subsection 45A(2) that section 45C applies to the whole, or any part, of the bonus shares.

Acquisition date of bonus shares

11. The bonus shares you receive under the DSSP are taken to have been acquired when you acquired the Mirrabooka ordinary shares in relation to which Mirrabooka issued the bonus shares (original shares) (table item 1 of subsection 130-20(3) of the ITAA 1997).

Cost bases and reduced cost bases of bonus shares

12. The first element of the cost bases and reduced cost bases of your Mirrabooka shares will be determined by apportioning the first element of the cost bases and reduced cost bases of your original shares over both the bonus shares and the original shares (table item 1 of subsection 130-20(3) of the ITAA 1997 and subsections 6BA(3) and (6)).

13. We consider it reasonable to apportion the first element of the cost base and reduced cost base of each parcel of the original shares on a pro rata basis over both the parcel of original shares and the bonus shares issued in respect of them. The result of this apportionment will be the first element of the cost base and reduced cost base of each of those Mirrabooka shares.

Scheme

14. This description of the scheme is based on information provided by the applicant. If the scheme is not carried out as described, this Ruling cannot be relied upon.

Mirrabooka Investments Ltd

15. Mirrabooka is a public company listed on the Australian Securities Exchange. It is a 'listed public company' as defined in section 995-1(1) of the ITAA 1997, and a 'listed investment company' as defined in section 115-290 of the ITAA 1997.

16. As at 30 June 2025, Mirrabooka had approximately 222,528,000 shares on issue. All shareholders in Mirrabooka acquired their shares on or after 20 September 1985.

17. Mirrabooka has paid fully franked dividends in respect of its ordinary shares for each year since 2001. It is Mirrabooka's intention to continue this pattern of paying fully franked dividends to shareholders.

Dividend Substitution Share Plan

18. Mirrabooka offers its shareholders a choice to receive dividends (either in money or through a dividend reinvestment plan) or to participate in the DSSP during the period to which this Ruling applies.

19. Under the DSSP, shareholders can choose to have some or all of their Mirrabooka shares participate in the DSSP (subject to the minimum and maximum levels as determined from time to time by the directors of Mirrabooka). Participation in the DSSP is voluntary and may be varied and terminated at any time subject to notice requirements.

20. If shareholders choose to participate in the DSSP, they will not receive dividends in respect of the Mirrabooka shares that they have chosen to participate in the DSSP. Instead, they will be issued fully paid ordinary shares in Mirrabooka to the equivalent value of the dividend foregone (rounded down to the nearest whole number of shares, with any residual amount carried forward).

21. Mirrabooka shareholders are not required to provide any consideration, credit any money or give any property to Mirrabooka to receive bonus shares under the DSSP.

22. Mirrabooka shareholders will continue to receive dividends from Mirrabooka in respect of shares that do not participate in the DSSP.

23. The DSSP is offered to all Mirrabooka shareholders, with certain exceptions provided under the plan rules. Generally, Mirrabooka shareholders will only be eligible to participate in the DSSP if they have a registered address in Australia or New Zealand.

24. Mirrabooka will not credit its share capital account in connection with the issue of bonus shares under the DSSP.

25. No dividend paid by Mirrabooka on its ordinary shares will be unfranked or franked to less than 10%.

Commissioner of Taxation
21 October 2026

Appendix – Explanation

This Explanation is provided as information to help you understand how the Commissioner's view has been reached. It does not form part of the binding public ruling.
Table of Contents Paragraph
Bonus shares are not taken to be dividends under section 6BA 26
Cost bases and reduced cost bases of bonus shares 33
      Example – first element of the cost bases and reduced cost bases of bonus shares 35

Bonus shares are not taken to be dividends under section 6BA

26. Section 6BA provides the rules for the treatment of the issue of bonus shares.

27. Subsection 6BA(1) states that section 6BA applies if a shareholder holds shares in a company (original shares) and the company issues other shares (bonus shares) in respect of the original shares. The Mirrabooka ordinary shares which you owned before being issued with ordinary shares under the DSSP are the original shares. The Mirrabooka ordinary shares issued under the DSSP are the bonus shares.

28. Subsection 6BA(5) states that, subject to subsection 6BA(6), if a shareholder has a choice whether to be paid a dividend or to be issued shares and the shareholder chooses to be issued with shares:

•
the dividend is taken to be credited to the shareholder
•
the dividend is taken to have been paid out of profits, and
•
subsections 6BA(2) and (3) apply in working out the consideration for the acquisition of the shares for the purposes of the income tax legislation.

29. The effect of subsection 6BA(5) is that the issue of shares will be treated as the payment of a dividend for income tax purposes under section 44.

30. However, subsection 6BA(6) states that subsection 6BA(5) will not apply if:

•
a shareholder in a 'listed public company' (as defined in subsection 995-1(1) of the ITAA 1997) has a choice whether to be paid a dividend (other than a minimally franked dividend within the meaning of subsection 45(3)) or to be issued shares, and the shareholder chooses to be issued with shares, and
•
the company does not credit its share capital account in connection with the issue of those shares.

31. As the requirements of subsection 6BA(6) are satisfied by the DSSP, the value of the bonus shares will not be taken to be a dividend that is included in your assessable income under section 44.

32. Further, the Note to subsection 6BA(6) states 'If subsection (5) does not apply because of this subsection, subsection (3) will apply'. Subsection 6BA(3) provides the rules for determining the tax treatment of the bonus shares issued in the situation where the bonus shares are issued for no consideration for tax purposes and are not taken to be a dividend.

Cost bases and reduced cost bases of bonus shares

33. The first element of the cost bases and reduced cost bases of the bonus shares issued in respect of the original shares will be determined by apportioning the first element of the cost bases and reduced cost bases of the original shares in a reasonable way over both the original shares and the bonus shares (subsection 6BA(3) and table item 1 of subsection 130-20(3) of the ITAA 1997).

34. We consider it reasonable to apportion the first element of the cost base and reduced cost base of each parcel of the original shares on a pro rata basis over both the parcel of original shares and the bonus shares issued in respect of them. The result of this apportionment will be the first element of the cost base and reduced cost base of each of those Mirrabooka shares.

Example – first element of the cost bases and reduced cost bases of bonus shares

35. You own 1,500 original shares and are subsequently issued with 375 bonus shares where:

•
500 of the original shares were acquired on 1 July 2024, with the first element of cost base and reduced cost base being $1 per share, and
•
1,000 of the original shares were acquired on 1 July 2025, with the first element of cost base and reduced cost base being $1.50 per share.

36. The first element of the cost bases and reduced cost bases of your 1,875 Mirrabooka shares following the issue of the bonus shares will become:

•
625 shares with an acquisition date of 1 July 2024, with the first element of cost base and reduced cost base being $0.80 per share ((500 × $1) ÷ 625 = $0.80), and
•
1,250 shares with an acquisition date of 1 July 2025, with the first element of cost base and reduced cost base being $1.20 per share ((1,000 × $1.50) ÷ 1,250 = $1.20).

© AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA

You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).


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