Managed Funds – How to Handle Them at Tax Time

What Is a Managed Fund?

A managed fund is a pool of money from lots of investors, managed by professionals who invest it in things like shares, property, or bonds. You don’t buy shares — you buy "units" in the fund. The value of your units rises or falls depending on how the fund performs.

Common Types of Managed Funds

• Property trusts

• Share/equity trusts

• Balanced or growth funds

• Imputation trusts

How Do You Make Money from Managed Funds?

Distributions

Each year (or half-year), the fund pays out your share of the earnings — this could include:

• Interest

• Dividends (some with franking credits)

• Foreign income

• Capital gains

Capital Gains or Losses

If you sell your units for more than you paid — that’s a capital gain. Sell them for less? That’s a capital loss.

What Do You Declare on Your Tax Return?

1. Distributions

• Your fund will send you an annual tax statement showing your share of income, franking credits, capital gains, and foreign income.

• You must declare the full amount shown — even if you reinvested it and didn’t take the cash.

2. Capital Gains or Losses

• If you sell or switch units in the fund, work out if you made a gain or a loss and declare it.

• The fund might also show capital gains made inside the fund. You must declare your share of these too.

Derek’s Tax Tips

• Franking Credits: If your fund invests in Aussie shares, you may get franking credits — these reduce your tax bill.

• Foreign Income: If the fund invests overseas, you might get foreign tax credits. Declare both the income and the credits.

• Non-Assessable Payments: Some funds send out non-taxable payments that reduce your cost base. That can mean a bigger capital gain later when you sell.

What Records Should You Keep?

• Annual tax statements from the fund

• Buy and sell confirmations for your units

• Records of reinvested distributions

Keep these for at least five years after you sell the units.

Let GoTax Handle It For You

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Gotax Online FAQ – Real Questions, Real Fast

Q: I got a managed fund statement with heaps of numbers. What do I do with it?
A: Use it to fill in the "managed fund" section of your tax return. It tells you what to declare — income, capital gains, franking credits and all.

Q: I reinvested my distributions. Do I still pay tax?
A: Yes. Even if you didn’t take the cash, you must declare the income.

Q: I sold some units and made a profit. Is that a capital gain?
A: Yes. Sale price minus cost base = capital gain. If you held the units more than 12 months, the 50% CGT discount may apply.

Q: The fund made a loss. Can I claim it?
A: If the fund made the loss, it keeps it. If you sold at a loss, that’s your capital loss and can offset other gains.

Q: Do I declare franking credits and foreign tax credits?
A: Yes — both. Franking credits reduce tax payable, and foreign credits help prevent double-taxing.

Q: I didn’t get a statement. What now?
A: Contact the fund manager. They're required to send one. Don’t guess or skip it — the ATO gets this data too.

Bottom line:
Managed funds can bring solid returns, but come with extra paperwork. Your annual statement spells out exactly what to declare — so don’t ignore it. The ATO already has a copy. 

Start your return now with Gotax

Additional Gotax Online Resources:

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