STW distribution question

[GG999]

STW distribution is

64.9348% franked at rate 32.3295%

What does this mean
Is the 64 bit the equivalent of 'fully franked' or 100%?
If so is the 32% bit the equivalent of 30%, the usual company tax rate
If so, why is it more than 30%

If the yield is stated at 2% for example, how would one use the above figures to calculate the equivalent yield for somebody on 0%, 31.5% tax rate etc?

is there an equation to do this, or are there spreadsheets out there?
Many thanks

 

[Judd]

Although STW is listed on the ASX, it is a managed fund. Under the legislation governing managed funds, it is a flow through entity, ie there are no reserves which can apply to companies, and the manager can only take their fee from the income, not capital.

Suppose for the year the fund received fully franked dividends totaling $70. The attached franking would be $30. The manager can take its fee (say 3%) from the $70 leaving $67.9. That amount together with the $30 franking credit is passed on to you so, as a percentage, the franking credit is higher.

As to the 64.9348%, that is the percentage of total income received as franked dividends. So you would need to multiply the cash distribution of 71.2901 cents by that percentage and work from there.

I wouldn't sweat on it though as STW sends a detailed statement showing, for you, the exact amounts in dollar terms.

And by the way, in case you are not already aware of it, although you receive the distribution in the 2010/2011 tax year, distributions from managed funds need to be included in your tax return for the year in which they accrued, ie you need to include the details in your 2009/2010 tax return.

Hope this assists you.

 

[GG999]

Although STW is listed on the ASX, it is a managed fund. Under the legislation governing managed funds, it is a flow through entity, ie there are no reserves which can apply to companies, and the manager can only take their fee from the income, not capital.

Suppose for the year the fund received fully franked dividends totaling $70. The attached franking would be $30. The manager can take its fee (say 3%) from the $70 leaving $67.9. That amount together with the $30 franking credit is passed on to you so, as a percentage, the franking credit is higher.

As to the 64.9348%, that is the percentage of total income received as franked dividends. So you would need to multiply the cash distribution of 71.2901 cents by that percentage and work from there.

I wouldn't sweat on it though as STW sends a detailed statement showing, for you, the exact amounts in dollar terms.

And by the way, in case you are not already aware of it, although you receive the distribution in the 2010/2011 tax year, distributions from managed funds need to be included in your tax return for the year in which they accrued, ie you need to include the details in your 2009/2010 tax return.

Hope this assists you.

That's brilliant Judd, many thanks
The higher franking credit had completely thrown me, but now you explain about the fee being taken out, it makes sense.

I've tried to calculate the dividend yield according to the tax rates of super funds or individuals receiving the dividends (distributions in case of etfs). Please don't take too seriously as I've just started with sort of thing, so what I've calculated might well be wrong

STW 2009-2010

Dividend 65.704 cents
% Franked 0.780071
Rate 0.32093
Grossed up to 89.93 cents

and 69.472 cents
% Franked 0.649348
Rate 0.323295
Grossed up to 91.02397 cents

Combined Grossed up Dividend is 180.95 cents
Take recent share price of STW = 3975 cents

'equivalent' dividend yields on different tax rates (using 2010/11 rates)

0% 4.6% yield
16.5% 3.8% yield
31.5% 3.1% yield
46.5% 2.4% yield

If wrong, please someone say

 

[Mr McGee]

And by the way, in case you are not already aware of it, although you receive the distribution in the 2010/2011 tax year, distributions from managed funds need to be included in your tax return for the year in which they accrued, ie you need to include the details in your 2009/2010 tax return.

I find this a little confusing. So if I buy STW units/shares now (March 2011) is it possible to have distributions paid to me that were in fact earned in the 2010/2011 tax year? Even though we are now firmly in the 2011/2012 tax year? And if so how do you claim these given my tax is already lodged for that year???

Sorry this is an old post.

 

[Judd]

Short answer is no.

If you buy STW now, and hold them, you are entitled to the next distribution not previous ones (it makes distributions twice a year, normally in January and July each year - see ASX web-site)

If/when you receive the distribution in July, it is that distribution which is included in the 2011/2012 tax year.

 

[Mr McGee]

Thanks Judd,

I like simple answers, so "no" is good enough for me!

Cheers.

Mr McGee

 

[Patch01]

Although STW is listed on the ASX, it is a managed fund. Under the legislation governing managed funds, it is a flow through entity, ie there are no reserves which can apply to companies, and the manager can only take their fee from the income, not capital.

Suppose for the year the fund received fully franked dividends totaling $70. The attached franking would be $30. The manager can take its fee (say 3%) from the $70 leaving $67.9. That amount together with the $30 franking credit is passed on to you so, as a percentage, the franking credit is higher.

As to the 64.9348%, that is the percentage of total income received as franked dividends. So you would need to multiply the cash distribution of 71.2901 cents by that percentage and work from there.

I wouldn't sweat on it though as STW sends a detailed statement showing, for you, the exact amounts in dollar terms.

And by the way, in case you are not already aware of it, although you receive the distribution in the 2010/2011 tax year, distributions from managed funds need to be included in your tax return for the year in which they accrued, ie you need to include the details in your 2009/2010 tax return.

Hope this assists you.

Just wondering if anyone could direct me to an ATO ruling on this? I called the ATO recently (before seeing Judd's post) and they told me that if such a Distribution is paid in July 2014, then it would be declared in the 2014/15 Tax Year.

Judd's advice certainly makes more sense, but ATO phone advice can often be contradictory and it would be reassuring to be able to refer to an ATO document.

Thanks in advance!

 

[Judd]

Just wondering if anyone could direct me to an ATO ruling on this? I called the ATO recently (before seeing Judd's post) and they told me that if such a Distribution is paid in July 2014, then it would be declared in the 2014/15 Tax Year.

Judd's advice certainly makes more sense, but ATO phone advice can often be contradictory and it would be reassuring to be able to refer to an ATO document.

Thanks in advance!

I'll quote the declaration at the bottom of STW distribution statement of 9 July 2014

"The SPDR S&P/ASX 200 Fund declares that it is a managed investment trust for the purposes of Subdivision 12-H of the Taxation Administration Act 1953 ("TAA 1953") in respect of the income year ended 30 June 2014. This distribution relates to the trust's year of income ended 30 June 2014."

The annual taxation statement issued by the fund on 18/ July 2014 states "This notice contains information required for the preparation of your 2013/2014 income tax return and should be read in conjunction with the 2014 Tax Guide attached."

Personally, I'll take the information provided by the fund, which has been listed for over 10 years, as a given rather than rely on oral advice from a Tax Office official who may not be entirely familiar with the taxation aspects of these products.

 

[DeepState]

Ex-date 26 June 2014. Record date 30 June. Pay date 8 July.

If you held it on 30 June, it's income you earned in 2013/14. You just get paid for it a little later.



Disclosure: Holder of STW-AU.

 

[Patch01]

Personally, I'll take the information provided by the fund, which has been listed for over 10 years, as a given rather than rely on oral advice from a Tax Office official who may not be entirely familiar with the taxation aspects of these products.

Ex-date 26 June 2014. Record date 30 June. Pay date 8 July.

If you held it on 30 June, it's income you earned in 2013/14. You just get paid for it a little later.

Thanks all, much appreciated!