Non-Assessable Stock in Australia: 2025 Investor Guide

Non-assessable stock isn’t a term you’ll hear at every backyard BBQ, but for Australian investors and business owners, it’s one that could have a big impact on your tax bill in 2025. With recent updates to corporate tax policy and continued market volatility, understanding how non-assessable stock works—and when it applies—can help you make smarter decisions about dividends, capital gains, and company restructures.

What Is Non-Assessable Stock?

At its core, non-assessable stock refers to shares or equity interests that are issued to shareholders without triggering an immediate income tax liability. In practical terms, when a company issues non-assessable stock, the recipient doesn’t have to include the value of those shares in their taxable income for that financial year.

This concept is most commonly seen in two scenarios:

• Bonus share issues: When a company issues new shares to existing shareholders in lieu of a cash dividend, often as part of a capital restructure.

• Demerger events: When a company splits off a subsidiary and allocates new shares in the spun-off entity to existing shareholders.

Both events can be structured as non-assessable under certain conditions, meaning shareholders get new shares without an immediate tax hit.

2025 Policy Updates and ATO Guidance

The Australian Taxation Office (ATO) keeps a close eye on corporate actions that might affect shareholder tax positions. In 2025, updated ATO guidance clarifies how non-assessable stock is treated, particularly in light of increased M&A activity and more frequent demergers across the ASX.

• Bonus Shares: If bonus shares are issued from a company’s share capital—not from retained earnings—they are generally non-assessable. However, if they’re funded from profits, they may be treated as a dividend and taxed accordingly.

• Demerger Relief: The ATO’s 2025 guidance continues to provide demerger relief for eligible restructures. This means shareholders receiving shares in a spun-off company may not need to pay tax on their receipt, provided the event meets specific criteria (such as the 80/20 ownership and proportionate interest rules).

• Record-Keeping: Investors must maintain accurate records of their original purchase price and any non-assessable stock received, as this will affect their capital gains tax (CGT) calculation when shares are eventually sold.

For example, if you owned shares in a large mining company that spun off its lithium division in 2025, and you received new shares in the lithium company as a demerger distribution, those shares may be non-assessable. The cost base for CGT purposes would be split between your original shares and the new shares according to ATO formulas.

Tax Implications and Investor Strategies

While non-assessable stock can be a tax deferral tool, it’s not a tax exemption. Eventually, when the shares are sold, the cost base is adjusted, and any gain is subject to CGT rules. The key benefits for investors include:

• Deferral of Tax: You won’t pay income tax on receipt, but you may face CGT later.

• Potential for Discounted CGT: If you hold the shares for over 12 months, you may be eligible for the 50% CGT discount.

• Flexibility in Timing: You can choose when to realise the gain and potentially time it for a lower-tax year.

For companies, non-assessable stock issues can help retain cash, reward shareholders, or facilitate complex restructures without creating immediate tax headaches for investors. This has become especially relevant in 2025 as more Australian firms pivot toward capital-light business models or respond to global supply chain shifts with strategic demergers.

Real-World Example: ASX Demerger in 2025

In early 2025, a major ASX-listed retailer announced a demerger of its e-commerce business. Shareholders received one new share in the spun-off company for every five shares they held in the parent. Because the demerger qualified for ATO relief, the new shares were non-assessable. Investors didn’t face an immediate tax bill, but they needed to adjust their CGT cost base for both sets of shares—crucial for future tax reporting.

Key Takeaways for Investors

• Non-assessable stock can provide tax deferral but requires diligent record-keeping.

• Check whether bonus shares or demerger distributions are truly non-assessable, as rules can differ by event and funding source.

• Review ATO updates each year, as eligibility criteria and reporting requirements can change.