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  • Guidance notes for fund managers

    Introduction

    Attention

    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    The 2003 standard format has been developed as a result of the concern of both the Tax Office and IFSA about the complexity and confusion experienced by managed fund investors in completing their tax returns. The standardisation of terms and presentation used in trust distribution statements to unit-holders is addressing these difficulties by promoting consistency. The input of the Australian Shareholders Association and Australian Independent Retirees Association in developing this agreed format is also acknowledged.

    The 2003 Standard Distribution Statement is the format recommended by the Tax Office and IFSA for managed funds to disclose tax information to resident individuals to help them complete TaxPack, relevant schedules and other requirements.

    Purpose

    These notes are prepared to assist those involved in preparing fund manager distribution statements to understand the basis on which the 2003 Standard Distribution Statement format has been determined, and the rationale behind the various items disclosed on the statement.

    Basis of Standard Distribution Statement

    The standard format does not purport to deal with all possible scenarios a fund manager may encounter. Where a fund's circumstances are outside those shown in the standard format, additional information or requirements need to be considered.

    The format is predicated on the standard information needs of a resident individual unit-holder in a unit trust operated by the funds management industry. It is also assumed that the unit-holder is a resident for the whole of the year of income.

    Fund managers should apply relevant provisions of the income tax law in preparing the tax information in the distribution statement, in particular Division 6 of Part III of the Income Tax Assessment Act 1936 (ITAA 1936).

    The 2003 Standard Distribution Statement is current at 6 May 2003. It was issued at this time to enable fund managers to implement the necessary systems changes before 30 June 2003 for 2003 income year reporting. If subsequent changes are necessary, the Tax Office will discuss these with industry bodies.

    Basic structure

    Part A of the 2003 Standard Distribution Statement is designed to directly highlight the 2003 tax return (supplementary section) items 12, 17 and 19 required to be completed by an investor in a managed fund. For investors with straightforward circumstances, the information in part A should be sufficient to complete their tax return.

    Part B contains the specific information required by a unit-holder to determine their foreign tax credit entitlement in accordance with the ITAA 1936.

    Part C provides details of the components of the distribution made that investors require in certain circumstances, such as for applying capital losses, the CGT schedule, foreign loss quarantining, cost base adjustment information and to allow a reconciliation of the net cash amount distributed to the unit-holder.

    Last modified: 09 Dec 2005QC 17181