Overview
The Australian Taxation Office (ATO) has issued Class Ruling CR 2026/53, which sets out the tax treatment of bonus shares issued to shareholders of WAM Active Limited under its Dividend Substitution Share Plan (DSSP). The ruling is in effect from 1 July 2026 to 30 June 2031.
What the ruling covers
The ruling confirms the following tax treatment for bonus shares received under the WAM Active Limited DSSP:
- Not treated as dividends: Bonus shares received under the DSSP are not treated as dividends for tax purposes.
- Not assessable income: Bonus shares are not included in assessable income.
- No franking credits: Bonus shares received under the DSSP cannot carry franking credits.
- Cost base apportionment: The cost base of the original shares is split across both the original shares and the bonus shares on a pro rata basis.
Scope of the ruling
The ruling applies to Australian resident shareholders of WAM Active Limited who hold their shares on capital account and choose to participate in the DSSP. The ruling does not apply to shareholders who are subject to the taxation of financial arrangements rules under Division 230 of the ITAA 1997.
Key actions
- Confirm that WAM Active Limited shares are held on capital account - not as trading stock or revenue assets - in order to rely on this ruling.
- Do not include bonus shares received under the DSSP in assessable income as dividends.
- Recalculate the cost base of WAM Active Limited shares upon receipt of bonus shares, splitting the original cost base across original and bonus shares on a pro rata basis.
- Do not claim franking credits in a tax return for bonus shares received under the DSSP.
- If Division 230 of the ITAA 1997 applies, this ruling does not cover that situation.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.