Tax deferred Dividends

[DionM]

I'm looking at SPN, and their dividends are 5.776c - 0.872C FRANKED @ 30% 3.288C TAX DEFERRED according to ASX.com.au.

What implication does the "tax deferred" dividend have on me? Do I still get a cheque for 5.776 per share as dividend?

 

[reece55]

I'm looking at SPN, and their dividends are 5.776c - 0.872C FRANKED @ 30% 3.288C TAX DEFERRED according to ASX.com.au.

What implication does the "tax deferred" dividend have on me? Do I still get a cheque for 5.776 per share as dividend?

Yes, you receive the whole divy, but the tax deferred portion is not taxable, but rather reduces the cost base of your investment. It is a distribution of capital, normally distributed via a unit trust.....

Cheers

 

[Hyperion]

Further to reece55's comments, if the tax deferred amount is higher than your cost base, then the excess will be treated as a deemed capital gain. This may happen if you hold a trust for a very long time during which it has been paying many tax deferred distributions.

 

[DionM]

Thanks for the info guys.

On further analysis it looks all decidely strange, so I'm going to hold off for a while.

 

[roland]

Correct me if I am wrong here guys, but I believe a simple explaination would be, that you don't pay tax on your dividends until you sell off your shares and make a capital gain.

This could be handy later on, say in retirement when your income (possibly)would be in a lower tax bracket. Sort of sounds like an accounting headache - but if accounted for correctly would work well for long term investments.

 

[Bruza]

I would like confirmation if roland's explanation is correct, as I'm interested in long term, & any tax break like that in retirement.

(No offence meant or implied roland)

 

[Hyperion]

Yes, you don't pay tax until you sell your shares/units except in the circumstances I outlined above.

May I also remind you that you dont pay any tax when your super fund is pension mode....

Hyperion

 

[coolcup]

Old thread, but thought I would revive it for the following question:

How do people keep track of the tax deferred component against their cost base for CGT? Is it just keeping a spreadsheet record or is there some nifty way I haven't thought of? Particularly if you are holding the shares for a while.

Also, if you buy several tranches of shares in a trust over time, does each tranche need to be monitored separately?I imagine dividend reinvestment on top of this would be a nightmare.