10cents,If the distribution is 10 cents per share that is...

10cents,

If the distribution is 10 cents per share that is declared than your INCOME is 10 cents x the number of shares you own. This is what you need to provide to your accountant to do your tax return. 10 cents of income per share.

Because you are getting shares, the issue price per share becomes your cost base for those shares. So if those "distribution shares" are issued at say 36 cents per share and you sell them for 40 cents, your Capital Gain is 4 cents. The 36 cents has already been taxed as income.

The ATO requires money from you as soon as the dividend is declared and you are holding past the ex-div date. That is, when you receive the dividend/shares in lieu. Hence my comments about BJT Management being rather shifty. They can give you shares but they can't give the ATO shares.

It's the same process as with a Dividend Re-Investment Plan.

Regarding question 2. It's 10 cents per share. It depends on the number of shares on issue not the share price. I am looking at the 2008 annual report. On page 53 it states that there are a total of 508,672,564 on issue as at 30th of June 2008. If a 10 cent per share distribution was declared and paid 100% as stock this would mean an additional 50,867,257 shares would be issued. So if you need to sell your stock/distribution you face 10% dilution.

I would add that in reality the AVERAGE person has an AVERAGE tax rate of about 30%. So, of the 10 cent distribution receiving 3-3.5 cents in cash would be satisfactory. I posit that BJT would have this in mind. Anythign less would challenge the cash flows of existing holders and what may in fact happen is that the stock would be dumped once the dividend is declared but BEFORE the ex-distribution date. I would also suspect that there would be some degree of institutional dumping too. Remember Maple-Brown Abbott and Vanguard own around 10% of BJT between them.