AFI, dividend susbstitution share plan (DSSP)

If anyone is using this plan now, can you describe the practical workings of it? Let's say if I elect to re-invest all my dividends into the plan to get extra shares, does that mean I don't need to declare any dividend income to the ATO since I'm receiving no cash?

The plan is to do the above for a number of years and then fund my retirement by changing to a cash distribution. I know there are CGT implications when the shares are sold but that's a trade off I'm willing to accept as I don't plan to sell for a very long time.

Cheers.

 

I believe your understanding is correct. I looked at this within the last twelve months but when all was said and done (at least for my situation) there was no real incentive to go down the DSSP route and I went with ordinary ETFs instead.
I'm in the top tax bracket but a bit of a way off retirement.

 

Don't forget you cannot claim interest

 

Thanks.

Hi Terry, do you mean if I take out a loan to purchase the original shares?

 

Yep

 

No, you declare the income and franking credits in your tax return each year.
The ATO will pre-fill these for you.

 

There is no income or franking credits with bonus shares.

 

WHF.asx has a similar set up with its bonus share plan (BSP).
It's ideal for those in the high income tax bracket, but the same tax/interest rate/franking credit rules apply.

 

Thanks. The WHF bonus share plan appears similar, if not identical, to AFI's DSSP.

 

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Does anyone know how to record DSSP or BSP correctly in Sharesight?
I'm ticking the "Non taxable" and "Dividend reinvestment" boxes but not sure this is the correct way.

 

I don't use sharesight but I assume it records buys and sells so is it possible to add a buy and only put in the quantity allocated under the DSSP with zero for the price? Maybe give it a try and see what happens.

 

You can choose the "Trade type" as "Bonus" to add the additional shares.

 

Does it mean that I need to reject automatic dividend payout and record the trade manually as bonus?

 

Yes correct.

 

Gotcha, thanks a lot!