outperformance fees tax deductable?

Discussion in 'Accounting & Tax' started by Smartypants, 16th Jul, 2007.

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  1. Smartypants

    Smartypants Well-Known Member

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    Hi all.

    Don't know about the quarter just passed, but in one of the quarters, there was an outperformance fee charged by Navra.

    Just wondering if this fee is tax deductable.
     
    Smartypants, 16th Jul, 2007
    #1
  2. Handyandy

    Handyandy Well-Known Member

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    Hi SP

    I would imagine that when this fee or any fee is applied it will reduce the distribution amount. As such, because you don't declare it as part of the income you also don't claim it as part of your expenses.

    Cheers
     
    Handyandy, 16th Jul, 2007
    #2
  3. coopranos

    coopranos Well-Known Member

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    I would think it would probably show up on your annual tax statement from the managed fund under "management fees" or some such thing. You would put it as a deduction in your Trust income section of your tax return.
     
    coopranos, 16th Jul, 2007
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  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    It doesn't show up in the annual tax statement ... as handyandy said - your distributions are net of fees, so there is nothing to declare.

    Generally the fees are calculated daily and taken directly out of the fund assets, and are thus reflected directly in the unit prices. As such, all fund transactions you make are net of fees, including distributions.
     
    Simon Hampel, 16th Jul, 2007
    #4
  5. Smartypants

    Smartypants Well-Known Member

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    Thanks for the replies all.

    The fees may not show up on the annual statement but on the statements I have thus far, I've paid $1657.81 in fees for my holdings in the Aust. fund and $1186.69 in fees for holdings in the US fund. So because they do appear, are they not claimable (for tax purposes).

    Just realised that my fees for the US fund are nearly as high as the Aust fund yet my holdings in the US fund are about 1/6th compared to Aust fund....grumble grumble.

    If these are definately not deductable, will that change when the new fee structure is implemented from this new financial year?
     
    Smartypants, 16th Jul, 2007
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  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    Nothing would change with the new fee structure - fees are still calculated the same way as far as I'm aware.

    You're thinking about these fees the wrong way.

    Unlike with property where you get your gross income from rent then subtract your expenses before working out your net income ... with shares and managed funds, the fees are already taken out before you get your income - you are working with NET income figures, not gross income. Same net result, but just calculated differently.

    In other words - you've already effectively claimed the fees when you declare your net income from the funds, so there's no need to claim them again.
     
    Simon Hampel, 16th Jul, 2007
    #6
  7. Smartypants

    Smartypants Well-Known Member

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    Ahh.....the penny drops. Got it now.

    Thanks Sim (& others).
     
    Smartypants, 16th Jul, 2007
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  8. Rob G

    Rob G Well-Known Member

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    If you hold units in a trust, then you are attributed with the NET INCOME of the trust. That is the fund distribution (plus reivested) for your units.

    You declare the NET INCOME in your tax return.

    You also claim any personal deductions connected with owning those units - e.g. interest expense on a loan to acquire the units.

    How does that sound ?

    Cheers,

    Rob
     
    Rob G, 16th Jul, 2007
    #8