What this ruling covers
The Australian Taxation Office has issued Class Ruling CR 2026/57 addressing the tax treatment of bonus shares received under WAM Alternative Assets Limited's Dividend Substitution Share Plan (DSSP). The ruling applies from 1 July 2026 to 30 June 2031.
How the DSSP works
Under the DSSP, eligible Australian resident shareholders can choose to receive bonus shares instead of cash dividends. The ruling confirms the following tax outcomes for participants who meet the eligibility criteria.
Bonus shares are not dividends for tax purposes
Bonus shares received under the DSSP are not treated as dividends for tax purposes. This means:
- The bonus shares are not included in assessable income.
- No franking credits attach to the bonus shares.
- Specific anti-avoidance rules do not apply to these shares.
Cost base treatment
The cost base of existing shares is spread across both the original shares and the new bonus shares on a pro rata basis each time bonus shares are received.
Eligibility criteria stated in the ruling
The ruling applies to participants who meet all of the following conditions stated in the ruling:
- The participant is an Australian resident.
- Shares are held on capital account, not as trading stock or revenue assets.
- The participant is listed on the share register on the relevant record date.
Exclusion for Division 230 participants
The ruling does not apply to participants who are subject to the Division 230 taxation of financial arrangements rules.
Key actions stated in the ruling
- Participants in the DSSP are required to confirm they meet all eligibility criteria in the ruling, including Australian residency, holding shares on capital account, and being listed on the share register on the relevant record date.
- Bonus shares received under the DSSP are not to be included as assessable income in a tax return, as the ruling confirms they are not dividends and are not taxable on receipt.
- The cost base of WAM Alternative Assets shares is required to be apportioned pro rata across both original shares and new bonus shares each time bonus shares are received.
- No franking credit offsets are to be claimed for bonus shares received under the DSSP, as no franking credits attach to these shares.
- Participants subject to Division 230 rules are outside the scope of this ruling.
The source ruling is available at the ATO legal database.
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.