What this ruling covers
The Australian Taxation Office has issued Class Ruling CR 2026/50, which sets out the income tax treatment of bonus shares received by Australian resident shareholders of Future Generation Australia Limited (ASX-listed) who elect to receive shares instead of cash dividends under the company's Dividend Substitution Share Plan (DSSP).
The ruling applies from 1 July 2026 to 30 June 2031.
Key tax outcomes confirmed by the ruling
- Bonus shares are not dividends: The ruling confirms that bonus shares received under the DSSP are not treated as dividends for income tax purposes and are not assessable dividend income.
- No franking credits: No franking credits attach to the bonus shares.
- No anti-avoidance provisions: The ruling confirms that anti-avoidance provisions do not apply to these bonus shares.
- Cost base treatment: The cost base of the original shares is spread across both the original and new bonus shares on a pro-rata basis.
- Acquisition date for CGT purposes: The acquisition date of bonus shares is taken to be the same date as the acquisition of the original shares in respect of which the bonus shares were issued. This affects eligibility for the CGT discount.
Conditions stated in the ruling
The ruling states the following conditions for it to apply:
- The shareholder is an Australian resident.
- The shareholder holds shares on capital account - not as trading stock or revenue assets.
- The shareholder is on the share register on the dividend record date.
Exclusion for Division 230
The ruling does not apply to shareholders who are subject to the Division 230 taxation of financial arrangements rules.
Where to find the full ruling
The full text of CR 2026/50 is available at the ATO's legal database: https://www.ato.gov.au/law/view/document?docid=CLR/CR202650/NAT/ATO/00001
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.