Overview
The Australian Taxation Office (ATO) has issued Class Ruling CR 2026/52 covering WAM Research Limited's Dividend Substitution Share Plan (DSSP). The ruling confirms the income tax treatment for Australian resident shareholders who choose to receive bonus shares instead of cash dividends from WAM Research Limited.
What the ruling covers
The ruling applies from 1 July 2026 to 30 June 2031.
The ruling confirms that bonus shares received under the DSSP are not treated as dividends for income tax purposes. As a result, those bonus shares are not included in assessable income when received.
Eligibility conditions
The ruling applies to shareholders who meet all four of the following conditions as stated in the ruling:
- The shareholder is on the share register on the record date.
- The shareholder is an Australian resident for tax purposes.
- The shareholder receives fully paid ordinary shares in lieu of dividends.
- The shareholder holds the shares on capital account - not as trading stock or revenue assets.
The ruling does not apply to traders, financial institutions subject to Division 230, or non-residents.
Key actions
The ruling specifies the following steps for eligible participants:
- Confirm all four eligibility conditions are met before relying on the ruling.
- Do not include DSSP bonus shares in assessable income when received, as the ruling confirms they are not dividends and are not taxable on receipt.
- Recalculate the cost base of both the original WAM Research shares and the bonus shares by apportioning the original cost base across all shares - original plus bonus - on a pro rata basis. This affects any capital gains calculation when the shares are eventually sold.
- Do not claim any franking credit offset in a tax return for shares received under the DSSP. The ruling confirms that bonus shares carry no franking credits.
Further information
The full ruling is available at https://www.ato.gov.au/law/view/document?docid=CLR/CR202652/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.