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CGT with Income Funds

Discussion in 'Managed Funds & Index Funds' started by samaka, 25th Nov, 2007.

  1. samaka

    samaka Well-Known Member

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    Sydney
    I assume funds which generate the bulk of their return through trading profits (e.g. Navra) would naturally have a large CGT component than a buy and hold (growth) orientated fund.

    Firstly is this true? Secondly, if true, does this not matter - as it can be offset against negative geared interest payments (or some other deduction)?
     
  2. AsxBroker

    AsxBroker Well-Known Member

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    8th Sep, 2007
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    Location:
    Sydney, NSW
    Hi Samaka,

    Funds which have profits through trading will generally distribute these profits as distribution (when the profits are derived from assets which have been held for less than 12 months) hence no capital gains (theoretically on the assets held for less than 12 months).

    When you receive these distributions it is counted as normal income, ie, added to your gross income.

    You could reduce your taxable income by negatively geared interest payments.

    Cheers,

    Dan

    PS This is general information which does not take into account your personal situation. Speak to your FPA registered Financial Planner, Accountant or Tax Adviser before making an investment decision.
     
  3. Simon Hampel

    Simon Hampel Co-founder Staff Member

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    Location:
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    No.

    Professional share traders generally must treat their profits from buying/selling shares as income rather than capital gains.

    See these documents from the ATO for more information:

    Holding shares or actively trading: what's the difference?

    Carrying on a business of share trading - Fact Sheet

    Thus, the distributions from a trading fund like NavraInvest are mostly income with very little in the way of capital gains included.