Dividends, DRP

Say I received $99 and I had subscribed to a DRP.
The company's shares were $50 each, I receive 1 share. Does the other $49 get recorded somewhere or do they just keep it for themselves?

Another question, whether I put something into this year's tax or last year's tax depends on the date of payment of the distribution, right? Not the record date or something else.

I've got this annual statement from the asx 200 etf, code: STW which says the distribution paid on 3 jul 2009 belongs to last years tax, weird.

niknah,

Regarding DRPs.

It depends on the company's Terms and Conditions relating to its DRP scheme which may do one of three things.

First is that the $49 is carried forward to the next dividend and used to buy further shares. Using you example, assume the company's next dividend is $99 and the reinvestment price is $50. Carrying the $49 forward means that you now have $148 for reinvestment and, at $50, get two shares ($100) with the balance of $48 again being carried forward. I you then cease the DRP arrangements you normally get the $48 paid to you. Or the T&C can require it to be forgone.

Second, the T&C may contain the provision that any the shares allocated may be rounded up or down. Again, using your example, if the share allocation is to be rounded-up then for the $99 you get two shares.

Another is that any residue is retained by the company but is donated to a charity. I've seen that is some DRP arrangements.

You really need to read the T&Cs for each company's scheme to understand how each works.

Regarding Dividends v Distributions.

If you receive a dividend from a company, say BHP or ANZ, then you declare it in your tax return for the financial year in which it is received, ie when paid into your bank account (or reinvested via a DRP).

For Distributions, such as those from STW, you need to understand that it, although it is listed on the stock exchange, is actually a managed fund, not a company, and under present law, distributions are required to be included in the tax return for the year in which they accrue not when they are paid.

For iShares (listed international indexed funds) it is a little different in that withholding tax applies as they are US based and distributions are, in this case, akin to dividends and are included in the tax return for the year in which they are paid not accrued.

Further reading

http://www.spdrs.com.au/fund_doc/fund_doc_20080229_172203/SPDR_PDS.pdf

http://au.ishares.com/literature/regulatory.do?docCategories=LIT_REGULATORY