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The last 12 months have welcomed a record-breaking number of first time ETF investors. As we roll closer to the end of the financial year, whether you’re completing a tax return for the first time as an investor, or just need a refresher, here are my top five tips for taking the stress out of tax time.
Tip 1: Register your details with the ETF registry.
When you invest in a BetaShares ETF, you will receive a welcome letter from Link Market Services (“Link”).
Link is the ETF registry service provider for BetaShares. Every ETF manager in Australia has one. While you may not have given much thought to your ETF registry, it plays an important role in your investment world and can make your investing life much easier.
If you have not registered your details, take five minutes to do this now. Your FY21/22 self will thank you for it!
Once you’ve registered via Link’s portal, check your details are up to date:
- Bank account: so you get paid distributions (win!)
- Tax File Number (TFN): if you don’t provide a TFN, you’ll have withholding tax deducted from your distributions at the highest marginal tax rate – no one wants that!
- Communication preferences: opt in to receiving email alerts from Link when important information is sent relating to your BetaShares investment. This includes tax statements and distribution statements.
If you have registered with Link, share this set-up guide with anyone who needs to ensure they’re not missing out.
Tip 2: Keep important info filed away.
Each time you buy or sell an investment, you’ll receive material that you’ll need come tax time. Keep these records in a safe, easy to find place. I learnt the hard way, and now have an email folder set up where I drag and drop information relating to my share portfolio throughout the year, including trade confirmations and distribution statements.
Tip 3: Double-check your tax return before hitting submit.
Information relating to your investments, including distributions and capital gains, will need to be included on your tax return. Fortunately, when it comes time to lodge your tax return online through the ATO, most of the information will be pre-filled – but you will need to double-check the information before you submit it, which is when your well-filed records come in handy.
Tip 4: Understand income, gains and losses at tax time.
Capital Gains Tax, or CGT, may come into play if you have sold out of an investment and made a profit. This profit (known as a ‘capital gain’) will need to be included on your tax return, and is taxed at your marginal tax rate as part of your income tax.
There’s some good news for longer-term holders, however: generally, if you have owned the investment for more than 12 months, you’ll only be taxed on half of the profits. This is called a capital gains discount.
On the flip side, if you sold out of an investment and lost money, this is known as a ‘capital loss’. This will need to be recorded on your tax return also. You can offset losses against any gains you have made in the same tax year. If you have made no gains, you are allowed to ‘carry forward’ your losses to offset against capital gains in future years.
Any distributions you are entitled to (regardless of whether you take them in cash or are registered for a distribution reinvestment plan (DRP)) during the financial year (1 July 2021 – 30 June 2022) must be included in your tax return. This applies even to any distributions you don’t actually receive until after 30 June 2022.
Tip 5: Know how to access your BetaShares annual tax statement.
Annual tax statements will be available if you are entitled to a distribution during this financial year. These will be available online via the Link Market Services portal, once you’ve logged in to your account. Handily, if you’ve opted in to receive information via email, you’ll receive a link to your tax statement straight in your inbox.
As you’ll see, with a little prep, tax time doesn’t need to be a drag. If you’d like to learn more, explore further FAQs, or don’t hesitate to contact us here or via social media.
It’s important to note BetaShares is not a tax adviser and this information should not be construed as tax advice. You should obtain professional, independent tax advice before making any investment decision or completing your tax return.