| DRIP investors need to maintain record keeping by their investments and reinvestments made. The cost basis of the share will vary and needs to be kept track in order to calculate capital gains when the shares are finally sold. The dividend earned or reinvested is an income and assessable for tax. These dividends can either be partly or fully franked under Australian tax laws.
Each time a transaction occurs the company will provide with updated Account Statements for the financial year.
Capital Gains are overlooked by investors and its one of the most important tax consequence of DRIPs. Investors are more concerned about expanding their investment while involved in a DRIP but in the long term selling must also be a secondary consideration.