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Reinvested Dividends - Tax treatment

  • 19-01-2014 1:56pm
    #1
    Cute Hoor
    Registered Users, Registered Users 2 Posts: 1,788 ✭✭✭


    There is a good article by Jon Ihle in today's Sunday Business Post about the Vodafone deal.

    There was one sentence though that surprised me. He states that 'dividends that are not reinvested are treated as income'.

    It was my understanding that the value of the dividend reinvested in shares is fully liable for income tax, the same as if the dividend was actually received, and when these shares are subsequently sold the sale gives rise to capital gains tax, but this tax is payable only on the increase in value beyond what you originally paid for the share (through the DRIP).

    Can anybody definitively confirm what the correct position is?


Comments

  • #2
    strmin
    Registered Users, Registered Users 2 Posts: 315 ✭✭strmin


    Your understanding was correct. If you reinvest the dividend you are still liable for income tax.


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