Managed Funds and Tax

[DownTheLine]

Hi,

Can someone help explain how tax works with Managed Funds.

The fund that I invested in makes an annual distribution with a statement that outlines components of Australia/Foreign interest and capital gains tax.
I'm a bit confused that the unit price of the fund has gone down but yet I need to pay capital gains tax. ??

thanks

 

[Julia]

Re: Managed Fund & Tax

Hi,

Can someone help explain how tax works with Managed Funds.

The fund that I invested in makes an annual distribution with a statement that outlines components of Australia/Foreign interest and capital gains tax.
I'm a bit confused that the unit price of the fund has gone down but yet I need to pay capital gains tax. ??

thanks

Asking the fund managers would seem a good place to start.

 

[Awesomandy]

Re: Managed Fund & Tax

With the funds that I have seen, they send you a tax statement, which also tells you what what numbers you need to put in at different sections. All you have to do is follow it, if I remember correctly.

 

[clowboy]

Re: Managed Fund & Tax

Hi,

Can someone help explain how tax works with Managed Funds.

The fund that I invested in makes an annual distribution with a statement that outlines components of Australia/Foreign interest and capital gains tax.
I'm a bit confused that the unit price of the fund has gone down but yet I need to pay capital gains tax. ??

thanks

one explanation would be that they have relieased profits (ie sold the shares) but are still holding onto losing shares (which would be bigger than the wins).

Shares go up, they sell them and you pay tax.

Other shares go down and they hold them so can't ofset the loss (yet)

 

[Judd]

Re: Managed Fund & Tax

Understand that a managed fund pays no tax. All income (net of fees) is passed on to you and you pay the tax at your marginal rate. Before the fund goes ex-distribution, the value of the funds, ie Net Tangible Assets, holdings includes the income to be distributed, so when the income is transferred to you, the NTA and thus the price of the units in the managed fund drops.

In regard to fees, due to present legislation, the manager can obtains its fee from dividend income from the companies it holds in the portfolio. The managers are not permitted to obtain their management fees from capital gains. This is why the distribution statement may indicate that franking credits are greater than 30%.

Good fun, what?