Why large discount to NTA?, page-18

The DSSP is of benefit if you're on a high tax bracket. Basically, you don't get paid a dividend and you instead get given shares equal to a dividend but minus franking credits. Only the AFI and one other LIC have this system which is brilliant.

Traditionally, because franking credits are at the company tax rate of 30%, if you're on a tax bracket higher than that, you pay the difference between your tax rate and 30% on the dividend you received.

If you're on a high tax bracket, and on DSSP, you forego the franking credit because your tax bracket is higher than the FC % and also the dividend. You still get the shares but they come without you having to declare the income received. This is good because there is no tax payable on the shares as they are technically not classified as income - good if you're on a high wage and any extra income would be taxed quite highly. It is also good if you never plan on selling, however, keep in mind, it can have CGT implications down the track if you ever do sell because your cost base lowers over time.

Example: 1,000 shares of AFI @ $6,000 buy price = $6 average buy price per share / DSSP of 20 shares: I now have 1,020 shares of AFI @$6,000 buy price = $5.88 average buy price per share.

If you never plan on selling, then the DSSP is a fantastic option. It is why it is there - To promote long term accumulation.

If you're on a tax bracket at around 30% it isn't really worth it because the franking credit received with the dividend equals out. In that case, the DRP option may be the better option. If you're at 37.5% or higher then it may be worth looking into DSSP over DRP.

Both the DRP and DSSP plan are great options. For me, I am a happy AFI accumulator and am on a high tax bracket so the DSSP suits me better. Your situation may be different so you'll have to explore that. There are many great FIRE blogs out there on DSSP vs DRP. Have a read and learn!

I hope that helps. I'm all about FIRE education and assisting the FIRE community with as much knowledge as I can!