Australian (ASX) Stock Market Forum

ETF dividend

Joined
19 July 2022
Posts
1
Reactions
3
Hi

Really need help.

I got an ETF BBUS which announced 1.1254 and I have 1200 units but end up only $81 send to my bank.

And they comment below.

“Under the AMIT Framework, with which the Fund has assumed, 50% of the Fund’s distribution payable has been provided to unit holders, while the remaining amount has been retained within the Fund. Note that the portion of distribution retained in the Fund means that your post-distribution unit price remains higher. For more insight into the AMIT Framework, please refer to the following FAQ page: https://www.betashares.com.au/investors/tax-information/.


Is it true? If 50% retained, why it not just announce 50% of dividend? And are they allow to do so?

Thanks for your help in advance.
 
Joined
24 May 2013
Posts
555
Reactions
684
i don't hold BBUS but from the numbers you quoted above (which don't add up by the way - 81/1350 is nowhere near 50% - i suspect the difference comes from withholding tax due to you not giving them your TFN) 1.1254 * 1200 = $1350 is the attribution, $81 is the distribution. these aren't the same thing!

even though you only receive $81, you have to declare the entire $1350 as taxable income. you also increase your cost base by $1.0575 (assuming nothing was withheld - you need to double check your statements to see if anything was) ie. (1350 - 81) / 1200 to account for the fact that you only received $81, but had to pay tax on $1350. effectively you are paying tax in advance and only getting the benefit when you sell units, as the increased cost base will reduce your CGT liability. this is not a good outcome in my view!

none of this is advice of course. if you really need to know for sure, talk to your accountant.
 
Joined
3 April 2017
Posts
1,417
Reactions
2,183
These sorts of things is why I avoid having anything to do with ETFs of this nature. Sorry you're in a pickle. Sharkeman is correct it's best to get professional advice. I suspect if you contact Betashares you will be advised of that. They are not permitted to provide tax advice.

Interesting annual components breakdown. The amount you received doesn't even appear to equate to the interest component.

Love the negative AMIT cost base increase which is -100%

1658199501753.png


The above obtained from the ASX web-site.

 
Joined
8 June 2008
Posts
10,353
Reactions
13,780
Just to add a little to the previous two posts, you should get an Annual Tax Statement from BBUS. Wait for this before lodging your tax return.

KH
Bboz,bbus,gear and ooo paid dividends this week.
Was most welcome
Best to wait for their statements indeed before lodging your taxes.
I never understood why i , as individual, has to pay tax on these amounts on the previous FY whereas i receive the money in fy 22-23..but this is what it is
 
Joined
24 May 2013
Posts
555
Reactions
684
I never understood why i , as individual, has to pay tax on these amounts on the previous FY whereas i receive the money in fy 22-23..but this is what it is

i asked my accountants about this several years ago as i noticed it happening for IVV, but not for VEU. it boils down to what legal entity is used for the ETF. IVV is structured as a managed investment trust, as such the distribution paid in Jul 2022 is taxable in FY2021-22 because the trust received the income for that distribution over Apr-Jun (from the underlying holdings that paid out divs in that quarter) and trusts cannot retain income across financial years without heavy tax penalties, they have to distribute all of it to beneficiaries/unit holders.

whereas VEU is structured as a nominee company that only owns units of a US domiciled managed investment trust, and it's that US domiciled investment trust that owns the actual units of the stocks constituting the index. when that nominee company receives a distribution from the managed investment trust for the Apr-Jun 2022 quarter, it declares that as part of its FY2021-22 tax return for the same reason. but when the nominee company passes your share of the distribution on to you, that just gets treated like any other company div and taxed based on when you actually receive the cash.
 
Joined
3 April 2017
Posts
1,417
Reactions
2,183
I never understood why i , as individual, has to pay tax on these amounts on the previous FY whereas i receive the money in fy 22-23..but this is what it is

As Sharkman has stated. Most are Trusts and income is accrual based. What happens under these Trusts is the unit holder is made "presently entitled" to the income in the tax year even if the distributions are made after the tax year has ended. Anyway, that's my understanding based on what I was told by a tax specialist some years ago.
 
Joined
8 June 2008
Posts
10,353
Reactions
13,780
As Sharkman has stated. Most are Trusts and income is accrual based. What happens under these Trusts is the unit holder is made "presently entitled" to the income in the tax year even if the distributions are made after the tax year has ended. Anyway, that's my understanding based on what I was told by a tax specialist some years ago.
Yes@Belli it is and you are right, but that does not make it logical/sensible on an individual basis.more revenue for ato in inflationary environment plus bring forward revenues. Something our politicians and the ato really like
 
Joined
24 May 2013
Posts
555
Reactions
684
Yes@Belli it is and you are right, but that does not make it logical/sensible on an individual basis.more revenue for ato in inflationary environment plus bring forward revenues. Something our politicians and the ato really like

i'm just as cynical towards the tax office and the government as the next guy, but i honestly don't think there are any shenanigans going on in this case. a trust has to distribute all of its income to beneficiaries/unit holders in the year it accrues, otherwise they face heavy penalties, that's just the way trusts have worked for ages. if the fund manager has elected use a trust structure, there's nothing illogical about the tax treatment of the distros. all trusts have to abide by the rules, they don't give out exceptions because a trust happens to be the holding vehicle for an ETF.

as for why a fund manager would choose to use a trust entity over a nominee company where the unit holders can declare the income in the tax year it was received, i don't really know. possibly it helps reduce their operating expenses due to the simpler structure, which (hopefully) they're passing on to us in the form of a lower MER than it would otherwise be. gotta take the good with the bad here.
 
Joined
3 April 2017
Posts
1,417
Reactions
2,183
Yes@Belli it is and you are right, but that does not make it logical/sensible on an individual basis.more revenue for ato in inflationary environment plus bring forward revenues. Something our politicians and the ato really like

I get your angst but these ETFs operate under the same principle as Family Trusts, Testamentary Trusts, etc. It is an established principle Trusts are required to distribute income in the year it is accrued. The concept of Trusts goes way, way back to the 12th Century or thereabouts and laws surrounding the operation of trusts have developed since then.

It isn't something cooked up by the ATO or politicians to sate their tax desires.
 
Joined
8 June 2008
Posts
10,353
Reactions
13,780
I get your angst but these ETFs operate under the same principle as Family Trusts, Testamentary Trusts, etc. It is an established principle Trusts are required to distribute income in the year it is accrued. The concept of Trusts goes way, way back to the 12th Century or thereabouts and laws surrounding the operation of trusts have developed since then.

It isn't something cooked up by the ATO or politicians to sate their tax desires.
So trust could give an estimated distribution on 30/06..the problem with that is that the trust investments in trusts investments are..etc etc.
Anyway, is not logical even if it is historical ..and if it was in our benefit, would have been changed .
No one jump on a horse to deliver mail but law is still following century old traditions or cases.
Rant over.i can not change it so have to live with it.
we all agree it is as explained above
 
Joined
3 April 2017
Posts
1,417
Reactions
2,183
Top