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Captial gains tax + switching options

Discussion in 'Managed Funds & Index Funds' started by Stonewall, 10th Aug, 2007.

  1. Stonewall

    Stonewall Member

    Joined:
    9th Aug, 2007
    Posts:
    20
    Location:
    Adelaide
    Hi guys, first post yay for me :)

    I've $32.6k in a range of managed funds, focused on high growt.
    I've ~$800 in a 'low risk" income based fund.
    But my "low risk" portion is covered in a separate bank account with $2.3k. This $800 in the income fund doesnt really fit in with my plan, and I was about to chuck it into an ASX based fund - when I remembered capital gains tax.

    I dont really understand it - and especially dont know how to factor it into my situation. I read here that there it is a sound strategy to "buy and hold". There is also some talk of holding onto things for a year. But yes, the numbers elude me, I've no idea if I should even care about tax concessions etc.

    This restructure Im planning is also a bit of a punt that the ASX will rebound.

    My income is ~$44k (soon to jump ~$2.5k).

    Will reducing my income option in the above switch incur capital gains tax (or paperwork) which will make it not really worth it?

    Thanks in advance

    PS. it occurs to me this might be a common query and I should of searched first, Sorry if this is the case, but I'm desperately trying to get to bed :p



    [EDIT - SHORT VERSION :p]
    • Ive $800 in an income fund, (of a portfolio of ~$32,00)
    • I dont need it in such a low risk fund, as this is covered in a bank account
    • I want to take a punt on ASX, and chuck it in an ASX based fund
    • my personal income is $44k
    • Are their capital gains tax issues worth my consideration?
     
    Last edited by a moderator: 10th Aug, 2007
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
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    Posts:
    4,619
    Location:
    Sydney, Australia
    The first two bits of information we need are:

    1. the unit price(s) you purchased at and how many units
    2. the current unit price

    ... then we can start to do some calculations.
     
  3. Stonewall

    Stonewall Member

    Joined:
    9th Aug, 2007
    Posts:
    20
    Location:
    Adelaide
    aye aye :D

    $750.00

    FROM:
    CFS Income
    (purchased unit price: $1.0001)
    (current unit price: $0.9974)

    TO:
    CFS Australian Share - Core
    (purchased unit price: $1.2693)
    (current unit price: $1.2299)


    I also see a $155 distribution on the CFS Australian Share - Core if that matters

    THe unit prices have gone down, so I should be alright correct?
     
    Last edited by a moderator: 10th Aug, 2007
  4. Simon Hampel

    Simon Hampel Co-founder Staff Member

    Joined:
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    Location:
    Sydney, Australia
    Exactly ... with income funds the unit price doesn't tend to go up much year-by-year, since most of the profits are distributed rather than retained for capital growth ... hence (depending on the timing of your purchases), you may well see a capital loss when you sell - meaning no tax (in reality, you've already paid tax on your distributions, so there's no magic here).

    In your case, if your sell price is below your average buy price, then there is no CGT to pay, regardless of how long you held the units.
     
  5. Stonewall

    Stonewall Member

    Joined:
    9th Aug, 2007
    Posts:
    20
    Location:
    Adelaide
    thanks mate

    Good to get someone "in the know" to take a peek at what Im doing, and express their reasoning.

    again thanks for taking the time with your opinion.