Tax aspects of Managed Funds| 2023 Gotax
What are Managed Funds and their Tax Return Impact
Managed funds are a type of investment where your money is pooled together with other investors’ money to buy a portfolio of assets, such as shares, property, or fixed interest. The fund is managed by a professional fund manager who makes investment decisions on behalf of the investors.
Managed funds can have an impact on your tax return because the income and capital gains generated by the fund are generally assessable for tax purposes. This means that you will need to include any income or capital gains from the fund on your tax return and pay tax on these amounts at your marginal tax rate.
In addition, you may be able to claim a tax deduction for certain expenses associated with acquiring and managing your investment in the managed fund. For example, if you pay fees to a financial advisor for advice on investing in the managed fund, these fees may be tax-deductible. Similarly, if you incur expenses in managing your investment in the managed fund, such as accounting fees or bank charges, these expenses may also be tax-deductible.
It’s important to keep accurate records of your income and expenses associated with your investment in the managed fund so that you can correctly report these amounts on your tax return. If you’re unsure about the tax implications of investing in a managed fund, it’s a good idea to seek advice from a qualified tax professional.
Let’s say you invest $10,000 in a managed fund that invests in a portfolio of Australian shares. During the year, the fund generates $500 in dividend income and $200 in capital gains. As an investor in the fund, you would receive a share of this income based on your investment.
On your tax return, you would need to include the $500 in dividend income and the $200 in capital gains as assessable income. This means that you would pay tax on these amounts at your marginal tax rate.
In addition, let’s say you paid $100 in fees to a financial advisor for advice on investing in the managed fund. You may be able to claim a tax deduction for this expense on your tax return. This would reduce your taxable income by $100 and lower the amount of tax you need to pay.
Investing in a managed fund can impact your tax return by generating assessable income and potentially allowing you to claim tax deductions for certain expenses associated with acquiring and managing your investment in the fund.
Managed funds can complicate your Tax Return. Get it right the first time with gotax.com.au.
It's also wise to consult a good looking accountant. You can also find them at Gotax.
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