Cost base of DRP shares - Aussie Stock Forums

# Thread: Cost base of DRP shares

1. ## Cost base of DRP shares

Hi All,

During the year I sold a shares a number of long term holdings. Two of the companies that I invested in were ARG and WAM. For both of these LICs I have been enrolled in the DRP. This has resulted in quite a few small parcels that I now need to calculate Capital Gains on.

I have kept track of all of the parcels in a spreadsheet, but am unsure of whether the cost base of the shares is the DRP price or the Dividend amount.

For example, I received a dividend of \$48 and the DRP price was set at \$5 per share. This would result in me receiving 10 new shares (the fractional amount is rounded up) in place of the dividend.

Is the cost base of this parcel of 10 shares :-
1. \$48
2. \$50 (ie 10 shares @ \$5)

I had assumed that it was \$48 as this is the amount that they cost me (ie the money I missed out on receiving in my bank account).

I have checked the ATO website and tried googling for the answer, but cannot find a definite answer either way.

2. ## Re: Cost base of DRP shares

Originally Posted by csb74
Hi All,

During the year I sold a shares a number of long term holdings. Two of the companies that I invested in were ARG and WAM. For both of these LICs I have been enrolled in the DRP. This has resulted in quite a few small parcels that I now need to calculate Capital Gains on.

I have kept track of all of the parcels in a spreadsheet, but am unsure of whether the cost base of the shares is the DRP price or the Dividend amount.

For example, I received a dividend of \$48 and the DRP price was set at \$5 per share. This would result in me receiving 10 new shares (the fractional amount is rounded up) in place of the dividend.

Is the cost base of this parcel of 10 shares :-
1. \$48
2. \$50 (ie 10 shares @ \$5)

I had assumed that it was \$48 as this is the amount that they cost me (ie the money I missed out on receiving in my bank account).

I have checked the ATO website and tried googling for the answer, but cannot find a definite answer either way.

The cost base for each parcel is always the price you paid; if the price for a parcel was rounded down, you paid only the lower price (\$48 in your example).

As an aside: Don't forget to add the brokerage you have paid for those share parcels that you bought on market; likewise, deduct any brokerage off the sale when you calculate the Capital Gain.