Tax Return Information Statement Guide

Transcription

1 Colonial First State Tax Guide Tax Return Information Statement Guide A guide to completing your income tax return using the Tax Return Information Statement from Colonial First State You should use this guide if you have received distributions during the financial year from the following Colonial First State products: Colonial First State Managed Investment Funds Colonial First State FirstChoice Investments Colonial First State FirstChoice holesale Funds Colonial First State Global Diversified Strategies Fund Colonial First State holesale Hedge Funds Count First Australian Share Fund. You will receive a separate Tax Return Information Statement for your investment in any of the products listed above. If you have withdrawn, switched or paid an adviser service fee during the year you will also receive a Capital Gains Taxation Information Statement from Colonial First State. All this information needs to be included when you complete your income tax return. Please contact your financial adviser or accountant about personal tax matters. For general enquiries about your Colonial First State investments, please refer to the Frequently asked questions on page 8, or call Investor Services on , Monday to Friday, 8am to 7pm, Sydney time. You can view this guide at colonialfirststate.com.au Give your accountant or financial adviser this guide. 1

2 Colonial First State Tax Guide 2005 This guide helps you in 3 ways: 1. to include distributions from your Colonial First State investments in your personal tax return 2. to understand the different tax components of your distributions with a Definitions page 3. to answer some commonly asked questions, that might save you a phone call. These are on page 8 of this guide. To complete your 2005 tax return, you will need: a copy of the 2005 TaxPack a copy of the 2005 TaxPack supplement Tax Return Information Statement for each of the Colonial First State products you hold that are listed on the front page of this guide. You will also need taxation information statements from any other incomepaying sources a Capital Gains Taxation Information Statement for each of the Colonial First State products from which you have withdrawn, switched or had an adviser service fee deducted during the year, and a copy of the Colonial First State Capital Gains Taxation Information Statement guide. You will not need this if you did not withdraw, switch or pay an adviser service fee from your investment your quarterly statements if you have paid an adviser service fee. If you have capital gains from other sources, or capital losses, you may also need the Personal Investors Guide to Capital Gains Tax, available from the ATO. Please read all the instructions in this guide before you complete the TaxPack supplement you intend to lodge. General points when using this guide: even if you have reinvested your distributions they still need to be included on your tax return if you have other Colonial First State products and/or income from other sources you need to include all of these amounts on your income tax return if you have borrowed money to invest in any Colonial First State products you should be able to claim a tax deduction for any interest you have paid if you have paid an adviser service fee you will generally be able to claim a tax deduction for this. 2

3 Colonial First State Tax Guide 2005 You will need to refer to the 2005 TaxPack supplement and your Tax Return Information Statement to complete the following steps: Summary of tax return for individuals (supplementary sections) items Part A Tax Return (supplementary section) Refer to Part A of your Colonial First State Tax Return Information Statement. Then follow the headings step-by-step. Non-primary production income (12U) This item already includes any imputation credits. Refer to your Tax Return Information Statement; Non-primary production income will have an amount next to it and a Tax Return Label (12U) on your Tax Return Information Statement. Enter this amount (plus any other amounts of nonprimary production income you have from other trusts) at Question 12 U of your 2005 tax return supplement. Other deductions relating to distributions (12Y) Refer to your Tax Return Information Statement; there will be no amount shown to the right of Other deductions relating to distributions next to Tax Return Label (12Y), for the financial year. However you may have other deductions that you can claim against the amount you have entered at 12 U. Deductions you may be able to claim include any adviser service fee you have paid during the year (these amounts are shown on your Adviser Service Fee tax invoice), interest on loans used to finance your trust investments, or other expenses incurred when earning income from your investments (for example Bank Accounts Debit Tax and bank charges). Enter the total deductions at Question 12 Y of your 2005 tax return supplement. Subtract the total deductions at Y from any amount you entered at U. The result should be entered in the Net non-primary production distribution box in Question 12. If this is a negative amount (a loss) print L in the Loss box to the right of this figure. Imputation Credits (12Q) Refer to your Tax Return Information Statement; Imputation Credits may have an amount to the right of it and a Tax Return Label (12Q) on your statement. Enter this amount (and include any imputation credits you received from other trust or partnership distributions) at Question 12 Q of your 2005 tax return supplement. Imputation credits for direct share investments should not be included here. You should seek professional advice if you have disposed of investments shortly after receiving a distribution with imputation credits. Credit for Tax File Number (TFN) amounts withheld (12R) Refer to your Tax Return Information Statement; Credit for TFN amounts withheld, Tax Return Label (12R) may have an amount to the right of it. Enter this amount at Question 12 R of your 2005 tax return supplement. Credit for tax paid by trustee (12S) Refer to your Tax Return Information Statement; there will be no amount shown to the right of Credit for tax paid by trustee (12S) for the financial year and nothing needs to be added to your 2005 tax return supplement for the Colonial First State products listed on the front page of this guide. Total current year capital gains (17H)/Net Capital Gain (17A) If you have no amount to the right of Net Capital Gain (17A) go to Assessable foreign source income at the top of page 5 of this guide. If there is an amount shown, work out which circumstance applies to you from the three options below. Do you have: Capital gains from Colonial First State only No capital losses E Follow the steps for Category 1 below Category 1 Capital gains from Colonial First State and other sources No capital losses E Follow the steps for Category 2 on page 5 Capital gains from Colonial First State Capital losses E Go to Assessable foreign source income on page 5 and then Part C on page 6 Question 17 Print X in the YES box at G at Question 17 on your 2005 tax return supplement. If you have an amount to the right of Total current year capital gains on your Tax Return Information Statement, enter this amount at 17 H on your 2005 tax return supplement. Take the amount to the right of Net capital gain on your Tax Return Information Statement and enter it in at 17 A. Go to Assessable foreign source income, on page 5 of this guide. 3

4 Colonial First State Tax Guide 2005 SAMPLE ONLY 4

5 Colonial First State Tax Guide 2005 Part A continued Category 2 For capital gains from other sources, you may need to use the Guide to Capital Gains Tax, which is available from the ATO. The guide provides step-by-step instructions to calculating the amounts needed to complete your tax return. Question 17 Print X in the YES box at G at Question 17. If you have an amount to the right of Total current year capital gains on your statement, add this amount to gains received from other sources (calculated using the ATO guide). The sum of these amounts should be entered at 17 H of your 2005 tax return supplement. Take the amount to the right of Net capital gain and add this amount to your net capital gain from other sources (calculated using the ATO guide). The sum of these amounts should be entered at 17 A. Go to Assessable foreign source income, in the next column. Assessable foreign source income (19E) If you have an amount to the right of Assessable foreign source income on your Tax Return Information Statement (and you do not have any other foreign source income from another source, including foreign employment or foreign pension/annuities), then enter the amount to the right of Assessable foreign source income at Question 19 E. If you do have foreign income from foreign employment and/or foreign pensions and annuities, you will need to refer to the instructions for Question 19 on pages S21-S26 in the 2005 TaxPack supplement. You should seek professional advice if you have deductions or losses carried forward relating to foreign income. Other net foreign source income (19M) If you have an amount to the right of Other net foreign source income on your Tax Return Information Statement (and you do not have any other foreign source income from another source (including foreign employment income or foreign pension/annuity income)) then include the total to the right of Other net foreign source income at Question 19 M. If you have foreign employment income or foreign pension/annuity income you will have to follow the instructions for Question 19 on pages S21-S26 in the 2005 TaxPack supplement. You should seek professional advice if you have deductions or losses carried forward relating to foreign income. Note: If you have Other net foreign source income or Assessable foreign source income from other sources (ie. other managed fund distributions) you will need to combine these amounts before completing your tax return. Foreign tax credit information Part B Additional information for Q19 You will need to refer to the 2005 TaxPack supplement to complete this section: Step 1 If you have an amount in the foreign tax paid column on the right hand side of your Tax Return Information Statement, you should obtain a copy of How to Claim a Foreign Tax Credit from the ATO. This booklet shows you how to calculate your foreign tax credit. Briefly, you can only use your foreign tax credits to offset Australian tax on the particular foreign income you have received. Step 2 Enter the result of your calculation for foreign tax credits at Question 19 O. 5

6 Colonial First State Part C Total components of distribution Follow these instructions if you have any capital losses (either this year or prior years). e have calculated the amounts of capital gains that need to be included in your tax return as they relate to the distributions from your Colonial First State investments. If you have capital gains from other sources, you may need to use the Personal Investors Guide to Capital Gains Tax, which is available from the ATO. Part B of that guide provides step-bystep instructions to calculating the amounts needed to complete your tax return. For gains from other sources you will need to separately calculate an indexed capital gain amount, a discounted capital gains amount, and a capital gains other amount. These amounts need to be added to the amounts distributed from Colonial First State and shown under the heading Additional capital gains information at the end of Part C of your Tax Return Information Statement. Add the figure shown at Total current year capital gains to any other gains you have and enter the total at Question 17 H. Print X in the YES box at G in Question 17. If you have any capital losses for the tax year or prior year capital losses brought forward (these will be shown at box V of Question 17 of your tax return supplement), you must nominate the capital gain against which these losses are to be applied. Typically, they will be applied firstly to Capital gains indexation method, then to Capital gains other method and lastly to the Discounted Capital gains. The way you apply your capital losses will place you in one of three situations: Situation A If the losses exceed the Total current year capital gains (shown at the end of Part C of your Tax Return Information Statement), the excess should be entered into box V at Question 17. No amount should be entered in box A. Situation B here the capital losses fully offset the amounts shown at Capital gains indexation method and Capital gains other method, then the amount shown against Capital gains discount method (shown at the end of Part C of your Tax Return Information Statement under the heading Additional capital gains information) should be reduced by any remaining loss. The end figure should then be divided by two and this amount entered into box A of Question 17. (If the investment is made by a company no division is required; if a superannuation fund then multiply by 2/3). Situation C SAMPLE ONLY here the total of the financial year capital losses and any year s prior capital losses, do not exceed the Capital gains indexation method and Capital gains other method (shown at the end of Part C of your Tax Return Information Statement under the heading Additional capital gains information), then deduct the amount of the loss from the amount shown in Part A of your Tax Return Information Statement opposite Net capital gain (17A). The reduced amount should be entered at Question 17 A. 6

7 Colonial First State Tax Guide 2005 Definitions Capital gains definitions CGT concession amount This amount represents the non taxable component of a discounted capital gain. That is, the amount is 50% of a capital gain that is not assessable to an individual. e have altered the calculation of this amount if you are a company or superannuation fund so the concession reflects the 0% discount, or 1/3 discount respectively. Capital gains discount method This amount represents capital gains on assets held for more than 12 months and has been discounted by 50% in accordance with the CGT rules that commenced in September If the investment is made by a trust or superannuation fund and this has been advised to us, the relevant discount has already been applied. There is no discount for companies. Capital gains indexation method This amount represents capital gains that have been calculated using the indexation method which adjusts for inflation. Indexation was frozen from September Capital gains other method This amount represents capital gains made on assets held for less than 12 months. Such gains do not qualify for either indexation or the CGT discount. Additional capital gains information These amounts represent the sum of all capital gains amounts distributed to you and is provided to help you complete your return, if you have capital losses. CA and NCA Capital Gains CA are capital gains that for taxation purposes are necessarily connected with Australia. Capital Gains NCA are capital gains that for taxation purposes are not necessarily connected with Australia. If you are a resident of Australia for tax purposes this distinction is irrelevant. If you are not a resident of Australia for taxation purposes this distinction will affect the amount of withholding tax deducted from your distribution. Other definitions Credits for TFN amounts withheld If you have not supplied your tax file number to Colonial First State, we have calculated tax at the top marginal rate (48.5%) and paid it to the Australian Taxation Office (ATO). This TFN tax will be offset against the tax payable on your income or refunded to you by the ATO when you lodge your tax return. To prevent this from happening again please provide us with your TFN as soon as you can. Tax-free amounts This category represents non-taxable income derived by the fund. This income will be from infrastructure investments. Tax-deferred amounts This category represents distributions that are not taxable to you. They have arisen due to differences between accounting and taxable income eg. those due to different depreciation rates. Tax deferred income may alter your cost base for CGT purposes when you redeem your units. Net cash distribution The total distributions you have received (including any which have been reinvested). 7

8 Colonial First State Tax Guide 2005 Frequently asked questions Q. Can everyone use this guide? A. Under certain circumstances you may not be able to use this guide to complete your tax return. The following scenarios outline some of these circumstances and we encourage you to seek professional advice if you think they apply to you: ant to find out more? For general enquiries about your Colonial First State investments, please call Investor Services on , Monday to Friday, 8am to 7pm, Sydney time or This tax guide provides general information and does not take into account your individual taxation and financial circumstances. You should discuss the information in this tax guide with your financial adviser or accountant. Copyright in Tax Pack 2005 subsists in the Australian Taxation Office. The responsible entity of the funds listed on the front cover of this brochure is Colonial First State Investments Limited ABN AFS Licence you have any expenses or carried forward foreign losses relating to foreign source income. This is because your entitlement to foreign tax credits will be affected. you changed your residency status during the tax year. If you became a non-resident during the year you may need to lodge an Australian tax return for the part of the year that you were a resident. If you became a resident during the year you may need to apportion your distributions to the respective periods. you disposed of your investment shortly after receiving a distribution containing a franked dividend component. Q. Can I claim a tax deduction for management fees and expenses of the funds? A. No, the management fees and expenses has already been deducted from distributed income. Q. I m not completing a tax return, can I still claim my imputation credits? A. You may still be able to claim your imputation credits. Contact the ATO for a copy of the relevant form. Q. Do I need to include my management fee rebate which appears on my half-yearly statement in my tax return? A. Normally any rebate should be included as assessable income in your income tax return. However, you should check your particular circumstances with your accountant. Q. If the investment is made by a company, trust, superannuation fund, or partnership, is the information in this guide relevant for my tax return? A. This guide is mainly prepared to assist individual investors to complete their tax return. However your Tax Return Information Statement is relevant. Some of the definitions and general information may also be of use to your accountant or financial adviser. Q. Can a mastertrust or IDPS service use this guide? A. Yes, however, you need to ensure that the investor s tax status (Individual, Trust, Company or Superannuation Fund) has been correctly recorded as this affects the capital gains details provided. Q. Can the imputation credits exceed the amount of my Australian income? A. Imputation credits can exceed the amount of Australian income included in your distribution because the management expense is deducted from the fund before the distribution payment. For example, let s say the fund income is $100 and imputation credits are $50. If the fund s expenses are $60, then income distributed to investors will be $40 while imputation credits remain at $50. Q. hy are my concessional capital gains greater than my taxable capital gains? A. This can happen due to the way expenses are allocated against income and capital gains. 6618/FS836/0605