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INCOME TAX ASSESSMENT ACT 1997 - SECT 130.20

Issue of bonus shares or units

  (1)   This section sets out what happens if:

  (a)   you own * shares in a company or units in a unit trust (the original equities ); and

  (b)   the company issues other shares, or the trustee issues other units, (the bonus equities ) to you in relation to the original equities.

  (2)   The first element of your * cost base and * reduced cost base for the bonus equities includes:

  (a)   for * shares--any part of the shares that are a * dividend (or taken to be a dividend under subsection   45(2) or 45C(1) of the Income Tax Assessment Act 1936 ); and

  (b)   for units--any part of the other units that are or will be included in your assessable income.

You are taken to have * acquired the bonus equities when they were issued.

Note 1:   There are special indexation rules for cost base modifications: see Division   114.

Note 2:   The amounts of calls you pay on partly - paid equities will also form part of the first element of their cost base and reduced cost base.

Note 3:   There is a special rule for shares issued on or before 30   June 1987: see subsection   130 - 20(2) of the Income Tax (Transitional Provisions) Act 1997 .

Note 4:   Certain capital distributions are taken to be dividends under subsections   45(2) and 45C(1) if a company has entered into a capital streaming or dividend substitution arrangement.

  (3)   This table sets out what happens if:

  (a)   none of the shares are a * dividend (or taken to be a dividend under subsection   45(2) or 45C(1) of the Income Tax Assessment Act 1936 ); or

  (b)   none of the other units are or will be included in your assessable income.

Note:   Certain capital distributions are taken to be dividends under subsections   45(2) and 45C(1) if a company has entered into a capital streaming or dividend substitution arrangement.

 

Modifications where neither a dividend nor assessable



Item



In this situation:

You are taken to have * acquired the bonus equities when:



There is this effect:

1

You * acquire the original equities on or after 20   September 1985

You * acquired the original equities

You apportion the first element of your * cost base and * reduced cost base for the original equities in a reasonable way over both the original and bonus equities

2

You * acquire the original equities before 20   September 1985 and an amount has been paid for the bonus equities that you were required to pay

The liability to pay the amount arose

The first element of your * cost base and * reduced cost base for the bonus equities includes their * market value just before that time

3

You * acquire the original equities before 20   September 1985 and the bonus equities are fully paid

You * acquired the original equities

Any * capital gain or * capital loss you make from the bonus equities is disregarded

4

You * acquire the original equities before 20   September 1985 and the bonus equities are partly paid but no amount has been paid since the issue of the bonus equities

You * acquired the original equities

Any * capital gain or * capital loss you make from the bonus equities is disregarded

    The amount paid or payable can include giving property: see section   103 - 5.

Note 1:   The amounts of calls you pay on partly - paid equities will also form part of the first element of their cost base and reduced cost base.

Note 2:   There is a special rule for bonus equities issued on or before 1 pm on 10   December 1986 that affects item   2 of the table: see subsection   130 - 20(3) of the Income Tax (Transitional Provisions) Act 1997 .

  (3A)   If only a part of a capital benefit that is bonus equities is a * dividend, or is taken to be a dividend under subsection   45(2) or 45C(1) of the Income Tax Assessment Act 1936 , you apportion the first element of your * cost base and * reduced cost base for the original equities in a reasonable way over both the original equities and the bonus equities.

  (4)   The modifications in this section are not made if, for the income year in which the bonus equities are issued, the unit trust is a public trading trust within the meaning of section   102R of the Income Tax Assessment Act 1936 .

Note:   Subsection   26BC(9E) of the Income Tax Assessment Act 1936 (about securities lending arrangements) modifies the operation of this section.

Table of sections

130 - 40   Exercise of rights

130 - 45   Timing rules

130 - 50   Application to options


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