2007 Taxation Statement Guide

Transcription

1 MLC MasterKey Unit Trust 2007 Taxation Statement Guide Issue Date: 10 July 2007 MLC Investments Limited ABN AFSL

2 Information in the Annual Taxation Statement This guide has been prepared to help transfer the information on your MLC MasterKey Unit Trust Annual Taxation Statement to your tax return Your Annual Taxation Statement for the MLC MasterKey Unit Trust is comprised of the following sections: Consolidated Components for your Tax Return for the Year ended 30 June 2007 This statement contains information relevant to the MLC MasterKey Unit Trust that you need to complete your tax return and a summary of investments that make up your account at 30 June 2007 If you have investments in more than one fund, the Consolidated Components for your Tax Return shows the total of all your investments A Detailed Breakdown of Distributions for the Year ended 30 June 2007 A summary of distributions are shown by individual component for each fund for the year Capital Gains Tax Summary for Withdrawal of Units for the Year ended 30 June 2007 If you made a switch or withdrawal during the year, you will also receive a Capital Gains Tax Summary for Withdrawal of Units You may have a choice between a gain calculated using the discount method or the indexation method for a particular withdrawal of units or switch The Capital Gains Tax Summary for Withdrawal of Units in conjunction with this guide will assist you to determine your Capital Gains Tax (CGT) liability Completing your Income Tax Return This guide is provided to help you, and your tax adviser, to prepare your income tax return It relates to any withdrawals and switches that you have made and to distributions you have received from units held in a MLC MasterKey Unit Trust account only, for the year ended 30 June 2007 If you have transferred your MLC MasterKey Unit Trust units into a MLC MasterKey Investment Service account in the 2007 financial year, you need to aggregate the amounts shown on both Annual Taxation Statements into the relevant TaxPack 2007 questions This guide has been prepared for general information only It is not intended to be a substitute for the ATO instructions and should be read in conjunction with them Each investors particular circumstances will differ and investors may require individual taxation advice Non-residents Investors who are not residents for Australian tax purposes should seek professional taxation advice and have their adviser refer to the Detailed Breakdown of Distributions Statement which provides all relevant financial information for non-resident taxpayers Non-resident taxpayers should note that the Capital Gains Tax Summary for Withdrawal of Units will not generally apply to them Generally speaking, a non-resident taxpayer does not have to pay Australian capital gains tax on unit withdrawals/switches unless that non-resident (and its associates) holds 10% or more of the issued units of a trust, and at least 90% (by market value) of the capital assets of the trust are taxable Australian real property (from 12 December 2006) or connected with Australia (prior to 12 December 2006) In addition, non-residents will not be subject to withholding tax on the distribution of capital gains derived from the Trusts assets that are not taxable Australian property Conduit foreign income If you are a non resident investor this amount is non-assesable non-exempt income and is not subject to Australian withholding tax Australian Residents Australian Income Non Primary Production This is part of your assessable income This includes income you have received from Australian dividends (franked and unfranked dividends), interest and other income Franking Credits These are the tax credits you have received from the distribution of franked dividends As tax has already been paid on these franked dividends at the company rate of 30%, the appropriate tax offset may be claimed These credits also form part of your assessable income Australian franking credits from New Zealand companies These are Australian franking credits attached to dividends or distributions paid by a New Zealand company that has elected into the Tran-Tasman Imputation regime Capital Gain/Loss on Sale of Units Please refer to the detailed examples and explanations in this guide, as well as the Capital Gains Tax Summary for Withdrawal of Units page of your Annual Tax Statement The Capital Gains Tax Summary for Withdrawal of Units together with this guide will assist you to determine your net capital gain The information contained in this guide is based on our understanding of the Australian taxation laws at the time of publication and primarily relates to the TaxPack 2007 Supplement If you are not using the TaxPack 2007 Supplement for individuals please consult your tax adviser Unit Trust 2007 Taxation Statement Guide 1 of 8

3 Distributed Capital Gains are your share of capital gains that were realised when the trust sold an investment and were paid to you as distributions The following types may have been distributed to you: Discounted Capital Gains This is your share of the net capital gains realised by the trust under the CGT 50% discount method These are gains made from investments that have been held for more than 12 months The treatment of these gains differ for individuals, trusts, complying super funds and companies The relevant treatments are shown on pages 3 to 8 Indexed Capital Gains These are capital gains on investments that were acquired prior to 21 September 1999 and have been held for more than 12 months and have been calculated using indexation frozen as at 30 September 1999 The Trustee has elected to calculate gains using this method where the indexed capital gain was less than the discounted capital gain after applying the 50% discount percentage Other Capital Gains There is no discount treatment or indexation available on capital gains realised on the sale of investments held for 12 months or less CGT Concession This amount relates to the excluded or non-assessable component of the capital gains calculated under the 50% discount method This amount reduces the cost base of your unit holding where it was distributed on or before 30 June 2001 However, no cost base reduction will be required where it is distributed after that date Any amount of CGT concessional discount income distributed during the financial year ended 30 June 2007 is shown on the Detailed Breakdown of Distributions Please note, if you were a unit holder and you received a distribution of this component in May 2000 then we have already adjusted your unit holding cost base calculating the capital gain/loss on withdrawals or switches during the year ended 30 June 2007 please refer to page 8 of this guide for further information about the adjustment Total Current Year Capital Gains This is the sum of discounted capital gains (x2) plus indexed capital gains plus other capital gains This is not a taxable income amount but merely a reportable item for individuals to include together with other capital gains at item 17 box H of their tax return This amount excludes capital losses If you have also received a Capital Gains Tax Summary for the Withdrawal of Units please use the Total Current Year Capital Gains provided on that Statement Foreign Income This is income derived from foreign sources (net of any foreign taxes paid) Foreign income has been categorised as: Interest; Modified Passive (dividends, rent, etc); Other foreign income; and Capital Gains (these are included within capital gains components shown on the Consolidated Tax Statement) Foreign Tax Paid This is the tax already paid on income sourced in a foreign country The tax paid also forms part of your assessable income The foreign tax paid (within its class) may be claimable as a tax credit against your tax payable, up to the amount of the Australian tax on that income The categories of foreign income and foreign taxes paid are relevant for quarantining of foreign sourced losses and claiming a foreign tax credit You should contact a professional tax adviser if you are in doubt on how to treat foreign income and foreign tax paid including how to apportion certain deductions in your tax return Tax Deducted Unless you have supplied a Tax File Number or claimed a relevant exemption, income tax at the highest rate (including Medicare Levy) has been deducted from all income distributed to you by the Fund If a Tax File Number has been supplied, or an exemption claimed, this item will show zero Over the page, you will find an example of an Annual Taxation Statement with extracts of the relevant sections from the TaxPack 2007 to indicate how Australian resident individuals should transfer the information to their tax return Pages 3 to 8 are designed to assist individuals in completing their 2007 individual tax return Unit Trust 2007 Taxation Statement Guide 2 of 8

4 If you have derived Capital Gains, you must print a X in the 'Yes' box at item 17 G of the TaxPack 2007 Supplement We have included below capital gains tax excerpts to assist you in completing your income tax return TAX RETURN ITEM Capital Gains (excerpt) Did you have a capital gains tax event during the year? G No Yes Total current year capital gains Net capital losses carried forward to later income years H V Net Capital gain A Individuals lodging a paper return do not need to lodge a Capital Gains Tax (CGT) Schedule 2007 and should follow the above example If you are lodging your tax return electronically and you had one or more CGT events happen during the year, you must also complete a Capital Gains Tax (CGT) Schedule 2007 if: 1 The Total Current Year Capital Gains for the income year exceeds $10,000; or 2 The Total Year Capital Losses for the income year exceeds $10,000 Importantly, if you have other investments, you will need to aggregate the capital gains and losses from all investments when completing the Capital Gains Tax (CGT) Schedule 2007 Capital Gains Tax (CGT) Schedule 2007 PART A CAPITAL GAINS FROM CGT ASSETS AND CGT EVENTS (excerpt) Please refer to Capital Gains Tax Summary for Withdrawal of Units Please refer to Capital Gains Tax Summary for Withdrawal of Units Please refer to Capital Gains Tax Summary for Withdrawal of Units 3,358 Unit Trust 2007 Taxation Statement Guide 3 of 8

5 MLC MasterKey Unit Trust Annual Taxation Statement for the year ended 30 June 2007 Account Name MR AN EXAMPLE 123 CAPITAL ST NORTH SYDNEY NSW 2060 Example only MLC MasterKey Unit Trust Account number units unit price value at 30 June 2007 MLC MasterKey Horizon 4 - Balanced Portfolio 2,29777 $12771 $2,93448 IncomeBuilder 1,52644 $19635 $2,99716 MLC Platinum Global Fund 1,73080 $16259 $2,81411 Property Securities Fund 2,21724 $14762 $3,27309 MLC Vanguard Australian Share Index Fund 1,61606 $18481 $2,98664 Total in this account $15,00548 Components for your tax return Amount Non-primary production income $1,20056 Franking credits $10837 Australian franking credits from New Zealand companies $000 TFN withholding credit $2000 Credit for tax paid by the trustee $1000 Total current year capital gains (see note >) $3,35856 Net capital gains $1,67928 Assessable foreign source income $17302 Other net foreign income $17302 Foreign Income Foreign Tax Paid Passive income $212 $16301 Other income $000 $1001 Total $212 $17302 Management fee refund (see note >) $2551 Adviser service fee (see note >) $14560 Adviser remuneration refund (see note >) $10907 assumes this is a Discounted capital gain MLC Investments Limited ABN AFSL Miller St, North Sydney NSW 2060 Important information Please retain this statement for Income Tax purposes Please refer to the Unit Trust 2007 Taxation Statement Guide for explanations of the terms used on the Consolidated Components for your Tax Return, the Detailed Breakdown of Distributions or the Capital Gains Tax Summary for Withdrawal of Units The Unit Trust 2007 Taxation Statement Guide provides information for most Australian resident taxpayers to complete the TaxPack 2007 details relating to an investment in the MLC MasterKey Unit Trust Total Current Year Capital Gains This is the sum of the distributed capital gains If you had withdrawals or switches during the year, please use the Total current year capital gain amount shown on the Capital Gains Tax Summary for Withdrawal of Units Refer to the Unit Trust 2007 Taxation Statement Guide for details Management Fee Refund This should be entered in item 22 Box V and the description Management Fee Refund shown in the space provided next to the Type of Income Category 2 Refer to pages s29 to s32 of the TaxPack 2007 Supplement for details Adviser Service Fee The Adviser Service Fee may be entered in item D7 of the TaxPack 2007 Refer to pages of the TaxPack 2007 for details Adviser Remuneration Refund This should be entered in item 22 Box V and the description Adviser Remuneration Refund shown in the space provided next to the Type of income Category 2 Refer to pages s29 to s32 of the TaxPack 2007 Supplement for details For advice about your investment/s call your financial adviser For all other queries about your investment, call us on You can also find out more on our website, mlccomau Unit Trust 2007 Taxation Statement Guide 4 of 8

6 The following information is taken from the TaxPack 2007 Supplement Investors who have other investments will need to aggregate the various totals before entering them into their tax return For more information please contact your tax adviser TAX RETURN ITEM Partnerships and trusts (excerpt) Primary production Distribution from partnerships Distribution from trusts Landcare operations and deduction for decline in value of water facility Other deductions relating to distribution Non-primary production Distribution from partnerships less foreign income Distribution from trusts less net capital gains and foreign income Landcare operations expenses Other deductions relating to distributions shown at O and U Include any deferred non-commercial business losses from a prior year at or as appropriate and insert the relevant code in the TYPE box N L I X Y O 2 Net primary production distribution U J Y Net non-primary production distribution TYPE TYPE Show distributions of: net capital gains at item 17 and foreign income at item 18 or 19 X If you have a net loss from a partnership business activity, complete items P3 and P9 in the Business and professional items section of this tax return, in addition to item LOSS LOSS Share of credits from income Share of credit for tax withheld where Australian business number not quoted Share of franking credit from franked dividends Share of credit for tax file number amounts withheld from interest, dividends, and unit trust distributions Share of credit for tax paid by trustee Share of credit for amounts withheld from foreign resident withholding P Q R S A TAX RETURN ITEM Foreign source income and foreign assets or property (excerpt) F Assessable foreign source income Also include at, Australian franking credits from a New Zealand company that you have received indirectly through a partnership or trust distribution Exempt foreign employment income Foreign tax credits During the year did you own, or have an interest in, assets located outside Australia which had a total value of AUD$50,000 or more? E N O P Other net foreign source income Australian franking credits from a New Zealand company Net foreign employment and net foreign pension or annuity income WITHOUT an undeducted purchase price Net foreign pension or annuity income WITH an undeducted purchase price No Yes L D M F 0 TYPE Unit Trust 2007 Taxation Statement Guide 5 of 8

7 How to use The Capital Gains Tax Summary for Withdrawal of Units This summary includes information you need to calculate any CGT liability that may have arisen from withdrawals or switches of your units in the MLC MasterKey Unit Trust This summary has been prepared for your records only To assist you in completing your income tax return, we have calculated the capital gains and losses on your withdrawals and switches This information is contained on the Capital Gains Tax Summary for Withdrawal of Units which shows the following details for each withdrawal or switch of an investment that you made during the last financial year: The type of transaction that occurred; The date that any units for a particular fund were withdrawn or switched; Sale proceeds The amount received from the transaction; and Discounted Capital Gains These are capital gains made on investments that have been held for more than 12 months The gain has been calculated on the basis that you are a resident individual or a trust (other than a complying superannuation fund) by applying a 50% discount rate Other types of investors will not be eligible to use the discount capital gain method (ie companies) or will not be able to apply the 50% discount rate and therefore will need to recalculate these gains in preparing their tax return Companies will need to double the discounted capital gain Complying superannuation funds will need to double the discounted capital gain and then apply the 3333% discount rate If you are an individual or trust and purchased the investment before 21 September 1999 and held it for more than 12 months you have a choice as to how to calculate your capital gain You may use either the discount method or the indexation method In situations where you have a choice, we have calculated the gain under both methods and you will see amounts in both the Discounted and Indexed Capital Gains columns in your Capital Gains Tax Summary for Withdrawal of Units If there is a zero in the Indexed Capital Gains column and an amount in the Discounted Capital Gains column, you still have a choice and you may find it beneficial to choose the capital gain calculated using the indexation method as this will result in the lowest tax liability To make your choice in the most appropriate way you may need to consider any carried forward and current year capital losses you have incurred Complying superannuation funds also have a choice, but will need to recalculate the discounted capital gain using the 3333% discount rate If you are a company and there is an amount shown in both the Discounted and Indexed Capital Gains columns, you must use the amount shown in the Indexed Capital Gains column You do not have a choice Indexed Capital Gains These are capital gains made on investments that were acquired prior to 21 September 1999 and were held for more than 12 months These amounts are calculated as the difference between your net sale proceeds and indexed cost base (using the index factor frozen at 30 September 1999) Taxpayers other than companies are able to choose whether to use the Indexed Capital Gain or Discounted Capital Gain Other Capital Gains ( 12 months) These gains are not subject to the choice scenario, are assessable in full and are the gains that were made on disposals that have taken place throughout the year where the asset parcel was held for 12 months or less Capital Losses This amount represents the capital losses you have incurred as a result of disposal of your assets during the year This amount was determined as the difference between the net sale proceeds and the reduced cost base You should note that if you chose to apply the capital losses against any discounted capital gains, you must apply the capital losses against the grossed up discounted capital gain amount before applying the discount percentage Current and prior year capital losses can be applied against any type of capital gains An effective option which you may choose is to firstly apply the capital losses to any Other Capital Gains (that is, gains on assets held for 12 months or less) Any remaining capital losses can then be applied against those capital gains calculated under the indexation method, and then, finally, against those capital gains to which the CGT discount can apply You should have regard to both capital gains distributed to you by trusts and capital gains arising from switches or withdrawals as shown on the Capital Gains Tax summary for Withdrawal of Units Please note that if you had applied capital losses against the grossed up discounted capital gains distributed in May 2000 by the MLC MasterKey Unit Trust then you must increase the cost base of your unit holding If the sale proceeds fall between the cost base used to calculate a capital gain and a capital loss, no capital gain or loss will arise In this situation a zero will appear in both the Discounted and Indexed Capital Gains columns Total Current Year Capital Gains If you had withdrawals or switches of your units we have also calculated this figure for you The total amount also includes from the Consolidated Components for your Tax Return, the distributed capital gains youve received during the year This amount is a reportable item that excludes any capital losses For individuals this amount must be shown at item 17 box H of their income tax return Where an amount appears in both the Discounted and Indexed Capital Gains columns, we have selected the lesser amount and included it in the Total Current Year Capital Gains figure The following table on page 7 is a guide to how we have calculated your capital gains/losses on your withdrawals and switches Unit Trust 2007 Taxation Statement Guide 6 of 8

8 Table A Capital Gains Treatments of Withdrawal of Units Duration of ownership Date of Purchase CGT Treatment Calculation of Capital Gains of units Method Applicable More than 12 months Before 21/9/99 CHOICE: Indexation Sales proceeds less indexed cost base O or Discount 50% of (sale proceeds less adjusted (whichever produces the lesser liability) cost base) # A after 20/9/99 Discount 50% of (sale proceeds less adjusted cost base) # 12 months or less N/a actual gain Sales proceeds less adjusted cost base # Please note: This treatment is only available to Individuals and Trusts (other than complying superannuation funds) A discount of 3333% applies in calculating Discounted Capital Gains for complying superannuation funds Assumptions The information that we have provided is based on the following assumptions: We have used the FIFO First In First Out principle in our calculations That is, the first parcel of units withdrawn, or switched is the first parcel you purchased, unless you have specified otherwise When you initially invested, you were not paid a cash rebate for any brokerage from your adviser When you initially invested, you did not pay an initial entry fee by separate payment You hold the investments in the underlying entities for the purpose of investment, rather than for resale at a profit, and that the CGT provisions apply to you In relation to the cost base adjustments, we have assumed that you are an individual or trust investor For complying superannuation funds and companies, we have provided additional explanatory notes on page 8 of this guide The investment withdrawn or switched constituted trading stock You have incurred additional incidental costs on the acquisition, holding and/or disposal of your units The investment withdrawn was transferred pursuant to a divorce settlement You have unrecouped capital losses You have other investments or have been subject to other CGT events outside of your MLC MasterKey Unit Trust investment You have purchased or sold investment assets other than at market value The examples above provide a guide to the types of circumstances that may affect the calculation of your actual liability for CGT We strongly recommend that you consult your taxation adviser if any of these situations or other special circumstances apply to you If any of these assumptions do not apply to you, you should consult your tax adviser In addition, the complexities of the CGT provisions give rise to a variety of circumstances that may require you to seek professional income tax advice in relation to calculating your actual liability for CGT Examples of such circumstances include: The investment withdrawn or transferred related to a deceased unit holder The investment withdrawn was transferred to you from a deceased estate You are able to take advantage of other forms of capital gains tax roll-over relief You are a non-resident for Australian income tax purposes Unit Trust 2007 Taxation Statement Guide 7 of 8

9 Treatment of your Withdrawals Table A displays the possible treatments of capital gains arising from withdrawals and switches You will notice that the date of purchase and sale are both important You should be aware that a withdrawal or switch may include units that were purchased on different dates Each different allotment of units must have its CGT implications calculated individually Cost Base Adjustments In order to correctly calculate your capital gains/losses, we have undertaken certain cost base adjustments Tax Deferred Income the cost base must be reduced for this whenever you receive this type of distribution This also includes non assessable building allowances distributed on or after 1 July 2001 Tax Free Income the cost base is only reduced for this when you incur a capital loss from redeeming or switching your units Companies and Complying Superannuation Funds and Cost Base Adjustments Because the calculations on the Capital Gains Tax Summary for Withdrawal of Units have been based upon you being either an individual or a trust (other than a complying superannuation fund) and therefore entitled to apply a 50% discount rate, you will need to recalculate capital gains/losses affected by a distribution of a CGT Concession in May 2000 If you are a company the cost base of affected units will need to be increased by the May 2000 CGT Concession amount (referred to as Non-Assessable-Discounted Capital Gains in your 2000 Annual Taxation Statement) If you are a complying superannuation fund the cost base of affected units will need to be increased by 3333% of the CGT Concession amount (referred to as Non-Assessable-Discounted Capital Gains in your 2000 Annual Taxation Statement) CGT Concession Discount the cost base must be reduced every time you received this component before 1 July 2001 This component was not distributed to you during the 30 June 2001 financial year and where applicable the cost base has been adjusted for the May 2000 distribution If you applied capital losses against discounted capital gains distributed back in May 2000, you will need to increase your cost base Please consult your taxation adviser mlccomau Your MLC MasterKey Unit Trust Annual Taxation Statement information is now available on our website at mlc comau MLC MasterKey offers a range of benefits, such as MasterKey Portfolio rebates and comprehensive investor reporting A single view of your entire portfolio gives you and your adviser ready access to information and provides the means for efficient updates on your investments For more information please visit our website at mlccomau or call the MasterKey Service Centre on from anywhere in Australia Unit Trust 2007 Taxation Statement Guide 8 of 8

10 How to contact us MasterKey Service Centre For more information call the MasterKey Service Centre from anywhere in Australia on or contact your Financial Adviser Website For details on MLCs investment process, services and other investment products visit mlccomau Postal address Reply Paid 1042 MLC Investments Limited North Sydney NSW 2059 Registered Office of MLC Investments Limited MLC Building Miller Street North Sydney NSW MLC 06/07