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Managed Investment Funds Again

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  • Managed Investment Funds Again

    I'm looking at diversifying the money I have in a managed investment fund, currently all in "Australian Shares", and putting some in a higher risk bracket (Geared), and some into different sectors like property funds or global resources (good time with the high dollar).

    Looking at the fund profiles, they break the annualised returns down into "Growth" and "Income/Dividend" brackets.

    Are there any tax benefits in regards to having a fund which focuses on either growth or income, or are they both treated the same when it comes to taxation (assume money is untouched, dividends reinvested)?

    My understanding is the dividends are taxed at the highest marginal bracket, whilst growth isn't taxed until you redeem units from the fund (at 50% of highest marginal rate)?

  • #2
    Originally posted by Jonchilds View Post
    1. Are there any tax benefits in regards to having a fund which focuses on either growth or income, or are they both treated the same when it comes to taxation (assume money is untouched, dividends reinvested)?

    2. My understanding is the dividends are taxed at the highest marginal bracket, whilst growth isn't taxed until you redeem units from the fund (at 50% of highest marginal rate)?
    1. a growth fund will have less income so less tax to pay, you will not have to add taxable income to your tax return. but there will be some cap gains as the fund will buy and sell, they work out the cap gains for you (50% discount etc) where a income fund has lots more taxable income to add to yours. the growth fund hopefully makes unrealised cap gains for you

    2. i think they just pass on the approprite div for your unit and any franking credits that are with the div. thats how my satements for the managed funds look. aussie divs and franking creds, overseas divs and credits, then cap gains (realised) and finally unrealised cap gains. you just add to your tax return and that factors in to your taxable income.

    you might look at a "small cap / company" fund as they pay less divs (normally) and this targets "growth companies".

    good luck
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