101 Ways to Save Money on Your Tax--Legally! 2013--2014 by Adrian Raftery

Author:Adrian Raftery
Language: eng
Format: epub
Publisher: Wiley
Published: 2013-12-14T16:00:00+00:00

53 Dividend reinvestment plans

Not all dividends are paid in cash. If it is a private company they can be credited against the shareholder’s loan account. Or you can be issued with new shares in lieu of the dividend via a ‘dividend reinvestment plan’ (DRP) or scheme.

Any dividend used to acquire shares under the DRP forms part of your Australian taxable income and you are required to pay tax on these reinvested dividends.

Pitfall

A lot of people think that because they didn’t receive a dividend in cash, but rather received some more shares in the company via a DRP, the dividend is not taxable. This is incorrect. All dividends paid, whether in cash or shares, must be included in your assessable income in the year they are received.

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