According to my understanding, the difference between DRP and...

According to my understanding, the difference between DRP and BSP is in their tax treatment:

1. DRP is treated as if you (your wife) received a dividend. Therefore, you pay tax on the amount of the dividend in the year in which it is paid. You also receive franking credits. Because your wife has no other income, chances are she has 0% marginal tax rate. Therefore, not only will she receive the dividend and pay no tax on that, but she will also get the franking credits refunded to her, meaning that in total, the dividend she actually receives in her pocket is higher than just the dividend itself.

Capital gains from selling shares received under the DRP are calculated with a cost base of the DRP price. It's subject to the 12 months 50% CGT discount.

2. The BSP is not treated as a dividend, but a bonus issue of shares. Hence, whilst you don't have to declare it in your tax return and pay tax on it in the year in which you receive it, neither do you get any franking credits from it. You will pay tax on the amount when you sell the shares, and it will be treated as capital gains, and enjoy the capital gains discount.

Capital gains from selling shares received under the BSP should be treated as having a cost base of $0 (I think).

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Therefore, DRP is good for those who don't mind paying tax in the year at their marginal rate of tax, whereas BSP is good for those who would rather pay 50% tax later down the track.

For your wife, seeing that it's unlikely that she has to pay tax on the dividend either way, DRP's probably better because she at least should get the refund from the franking credits.

Please seek your own tax advice from a registered tax agent. Do not rely on what I've said.