Managed Funds - A Tax Question - Aussie Stock Forums

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  1. #1

    Default Managed Funds - A Tax Question

    Hi all, new to these forums, and really couldn't find anywhere else to pose this question.

    I'm just doing my Tax return for 2007/08 and am going to have to pay money for a change. My question relates to my managed fund.

    (not real figures)

    At the beginning of 2007/08 FY, the value of my managed fund was $21000. In 2007/08, I invested $3000 into the fund, and by the end of 2007/08 FY, the value of my managed fund is $20500. ie, I effectively lost $3500 last FY.

    However, when I am entering data into etax, it comes up with the following figures:

    Non-primary production income: $500
    Franking Credits: $100
    Net Capital Gains: $600
    Total current year capital gains: $1200
    Assessable foreign source income: $400
    Other net foreign source income: $400

    And when I get to the Tax estimate screen I get:

    Credits/Tax Withheld:
    Partnerships and Trusts $100 (the Franking Credits figure)

    Partnerships and Trusts $500 (the Non-primary production income figure)
    Capital Gains $600 (the Net Capital Gains figure)
    Foreign source income and foreign assets or property $400 (the foreign figure)

    So it appears, that even though I made a $3500 loss on the managed funds over the year, my Income is being increased by $1500 from the managed funds! (less the $100 in credits I get).

    When talking to friends they thought I should get a Capital Loss for the year, as I've lost money. However I guess that only would've worked had I sold out of the Fund?

    I'm only guessing here, but the only way I can understand these figures is that the fund manager sold stocks that did make a profit over the year (hence the Positive Capital Gain), and held on to stocks that made a loss (so there was no Negative Capital Gain, as nothing was sold???).

    Can anyone shed light on the matter? Does it make sense that I'm paying extra in tax for a managed fund that lost me money?

  2. #2

    Default Re: Managed Funds - A Tax Question

    You have to pay tax on distributions you get from the fund. If you have not sold any units and have simply made a paper loss then that doesn't count.

    However, if the fund manager bought and sold shares (which is what they're paid to do) then that may have tax implications.

    You can ring up your fund manager and ask for a tax statement to help you fill out your tax return. Otherwise, go see an accountant.

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