Non-assessable payments from a managed fund to a unit holder are common and may be shown on your statement from the fund as:
- tax-free amounts (where certain tax concessions received by the fund mean it can pay greater distributions to its unit holders)
- CGT-concession amounts (the CGT discount component of any actual distribution)
- tax-exempted amounts (generally made up of exempt income of the fund, amounts on which the fund has already paid tax or income you had to repay to the fund), or
- tax-deferred amounts (other non-assessable amounts, including indexation received by the fund on its capital gains and accounting differences in income).
Note: You cannot make a capital loss from a non-assessable payment.
CGT-concession amounts received after 30 June 2001 and tax-exempted amounts (whenever they are received) do not affect your cost base and reduced cost base. However, if your statement shows any tax-deferred or tax-free amounts, you adjust the cost base and reduced cost base of your units for future purposes as follows:
- cost base - deduct the tax-deferred amount, or
- reduced cost base - deduct both the tax-deferred and tax-free amounts.
If the tax-deferred amount is greater than the cost base of your units, you include the excess as a capital gain. You can use the indexation method if you bought your units before 11.45am (by legal time in the ACT) on 21 September 1999.
Note: As a result of recent stapling arrangements, some investors in managed funds have received units which have a very low cost base. The payment of certain non-assessable amounts in excess of the cost base of the units will result in these investors making a capital gain.
A CGT-concession amount received before 1 July 2001 is taken off the cost base and reduced cost base.
Before 1 July 2001 payment of an amount associated with building allowances was treated as a tax-free amount. Payments of these amounts on or after 1 July 2001 are treated as tax-deferred amounts.