Help on Clarifying Tax Status of Distributions

Discussion in 'Accounting & Tax' started by Tim__, 13th Mar, 2007.

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  1. Tim__

    Tim__ Well-Known Member

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    1st Jul, 2015
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    Location:
    Lismore NSW
    Hello,

    I am trying to find out if distributions by way of dividends from both shares and managed funds are automatically reinvested (DRP), are they still treated as income for tax purposes for the applicable financial year, or are they considered as reinvested and therefore capital gain at the time that the asset is realised in the future.

    Thanks,

    Tim
     
    Tim__, 13th Mar, 2007
    #1
  2. Simon

    Simon Well-Known Member

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    Newcastle
    Income.

    You are deemed to have received them. Any reinvestment is seen as new funds.

    Cheers,
     
    Simon, 13th Mar, 2007
    #2
  3. Simon Hampel

    Simon Hampel Founder Staff Member

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    Simon is correct.

    This is one of the most common misconceptions I've seen about how dividends/distributions work ... having them automatically reinvested does not change the tax status - you are still liable for the tax on that income.
     
    Simon Hampel, 13th Mar, 2007
    #3
  4. masterjunko

    masterjunko Member

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    Biggest headache is when you sell them. Because all these re-invested units are of different price and time try to work out the amount of CGT payable is a pain...
     
    masterjunko, 13th Mar, 2007
    #4
  5. Tim__

    Tim__ Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    105
    Location:
    Lismore NSW
    Thanks everyone for the replies,

    that clarifies the situation and I thought it would be the case but wasn't sure.

    Luckily the shares and managed funds statements provide annual tax statements otherwise it would be a nightmare to work out.

    Thanks very much,

    Tim
     
    Tim__, 14th Mar, 2007
    #5