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Return of capital

A Return of Capital (ROC) is not dividend income. It reduces your parcel cost base first, then can create a capital gain only if the return exceeds remaining cost base.

When to use this

Section titled “When to use this”

Use ROC when:

  • an issuer pays back part of invested capital
  • a DRP residual is explicitly settled as Return of Capital

Do not use ROC for ordinary dividends.

Tax behavior in Metrifly

Section titled “Tax behavior in Metrifly”

Metrifly models ROC as a corporate action with:

  • an effective date (which holdings are impacted)
  • a paid date (cash timing and CGT timing)

Effects:

  • increases cash by the ROC amount
  • reduces parcel cost bases (down to zero floor)
  • records excess over remaining cost base as a capital gain (CGT event G1 style behavior)
  • does not create dividend income
Section titled “DRP residual settlement link”

From holding Settings → DRP Enrolment, residual adjustments can be settled as:

  • CASH
  • RETURN_OF_CAPITAL

Choosing RETURN_OF_CAPITAL creates a linked ROC transaction and keeps the residual adjustment auditable in the DRP pair history.

Section titled “Related articles”