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Dividends for ETFs - Which financial year?

Discussion in 'Accounting & Tax' started by Hodor, 13th Aug, 2016.

  1. Hodor

    Hodor Well-Known Member

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    Gathering tax information for some ETFs purchased this year (last financial year) only one lot of dividends has been paid since purchase and found for the Vanguard (and Market vectors which uses a different registry) ones.

    For all payments;
    Record date 4 Jul 2016
    Payment date 18 Jul 2016

    This seemed fine until I printed tax statements and on the statements (for both the distribution and the end of year tax statement) it has them listed in the 2016 financial year.

    My understanding is that these payments should be recorded in the 2017 tax year as that's when payment occurred. I have read the ATO website and called them and they indicated it should be recorded on the 2017 return.

    Is this a quirk of the share registry or am I missing something? Anyone else have this problem?
     
  2. Daniel Taborsky

    Daniel Taborsky Well-Known Member Premium Member

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    I'm pretty sure ETFs are trusts (not companies). What you are receiving are trust distributions (not dividends) - although a component of those distributions would be dividends received by the ETFs. The distributions you received in July 2016 would relate to the June 2016 income year. Unlike dividends which are taxed on a cash basis (i.e. when you receive them), for a trust you are tax on your share of the net income of the trust (regardless of when, or if, you receive the distribution).
     
  3. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    ETFs are a form of trust and the year end tax statements are often issued in August. The July distribution is likely a 2016 year element of income. The distribution notice will actually tell you ! However the components of the annual distribution need to be determined. ...Some may be tax free, CGT concessional or even franked with credits. refer to the annual tax report
     
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  4. marty998

    marty998 Well-Known Member

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    Listed Property trusts work the same way... you get paid in July/August, but the trust income relates to the prior year.

    Follow your tax statement.
     
  5. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    And then there are stapled securities which include both a dividend element and a trust distribution. Both cash based (dividend) and also "present entitlement" for the trust element. Often these are property trusts.... Called Reits (Real Estate Investment Trusts). But since they are ASX listed they are often called "shares" in error.

    Again refer to the annual tax statement. Whenever a tax statement is provided make sure this is provided to the tax agent or used for tax prep.

    https://www.moneysmart.gov.au/investing/complex-investments/stapled-securities