Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-3 - CAPITAL GAINS AND LOSSES: SPECIAL TOPICS  

Division 130 - Investments  

Subdivision 130-A - Bonus shares and units  

Operative provisions

SECTION 130-20   Issue of bonus shares or units  

130-20(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.

130-20(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.

130-20(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 .

130-20(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.

130-20(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.