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Bonus Shares (Taxation)

Volume 463: debated on Tuesday 29 March 1949

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asked the Chancellor of the Exchequer what is the basis of computation of the tax of 10 per cent. on bonus share issues.

A company which issues securities by way of bonus to its members is chargeable with duty of 10 per cent. of the value of the bonus as defined in Section 61, Finance Act, 1947, subject to certain exceptions. Very briefly, the value of the bonus is computed by taking the market value of the rights or securities (in the case of private companies the nominal value of the securities) and deducting therefrom the value of the consideration, if any, received by the company.