What this ruling covers
Class Ruling CR 2026/84, issued by the ATO, sets out the tax treatment for shareholders of Djerriwarrh Investments Limited who choose to receive bonus shares instead of cash dividends under the company's Dividend Substitution Share Plan (DSSP).
The ruling confirms that bonus shares received under the DSSP are not treated as dividends for tax purposes. This means they are not included in assessable income. The ruling also explains how shareholders are to work out the cost base of their shares for capital gains tax purposes, using a pro rata apportionment method set out in the ruling, with a worked example at paragraphs 35-36.
Scope and application period
This ruling is specific to Djerriwarrh Investments Limited shareholders only. It applies from 1 July 2025 to 30 June 2029.
The ruling applies only to shareholders who hold their Djerriwarrh shares on capital account, rather than as revenue assets or trading stock.
The ruling does not apply to shareholders who are subject to the taxation of financial arrangements rules in Division 230 of the ITAA 1997, unless they have specifically elected into those rules.
Key actions
- Shareholders in Djerriwarrh Investments Limited who participate in the Dividend Substitution Share Plan are to check whether CR 2026/84 applies to their situation before lodging a tax return
- Shareholders are to confirm they hold their Djerriwarrh shares on capital account, not as revenue assets or trading stock, as the ruling only applies to that category of shareholder
- Shareholders are to work out the adjusted cost base of original and bonus shares using the pro rata apportionment method set out in the ruling, with reference to the worked example in paragraphs 35-36
- The ruling does not apply to shareholders subject to the taxation of financial arrangements rules in Division 230 of the ITAA 1997, unless they have specifically elected into those rules
- Shareholders unsure how this ruling affects their specific shareholding may seek advice from a tax agent or accountant
This is a plain-English summary for information only, not legal or compliance advice. Always check the official source or consult a qualified professional.