ETF Exchange Traded Funds (ETFs) 2018

The cash component of the dividend hasn't been reduced. It revolves around the amount of franking.

Say an investor received $5,000 in dividends from MIR. With a company tax rate of 27.5% the franking is $1,896 but now revised to 30% it would be $2,142 - a difference of $246.

If the person has already submitted their personal tax return, because of the change in franking, they have under reported to the ATO by that amount. It could mean they either owe more or their refund could be greater. All depends on their personal tax situation.

All in all, a right proper PITA, especially since for most the amount involved wouldn't be all that large.

But it's best to always stay on the right side of the tax man I've found. Things can get nasty otherwise.

 

SK I’m rusty on tax so do you know if this can be processed as an amendment with 2019 returns?

 

I could be way off.
My understanding would be that the additional 2.5% or $246 in your example is already with the government as it's increased the franking which our hands never touch until after tax time. So everyone that has completed a return already will be able to claim extra cash back, there are costs in doing so however.

I like the 2019 amendment idea if it's doable

 

To be honest I don't know the answer nor am I qualified to say yes or no.

Yesterday evening I went trawling through the ATO web-site (youse owe me for that!)

Plenty of info for companies but for individuals or other entities such as SMSF's and the like, I could find absolutely zilch. Typical. I'll probably organise a coffee meet with the numbers dude tomorrow and have a chat.

Mind you if, as is likely in some cases, the difference is really small, I doubt whether anyone would even get out of bed for it. Imagine the nonsense of doing an amended tax return because of a difference of a $1. Be nice if there was a threshold under which amended returns were not required and include it in the next return but no I couldn't find anything on that either.

Mind you, the tax office can be weird. Years ago it wrote to me advising I had not included a dividend. I had but at the time you didn't apply the rounding rules just whole dollar amounts so i just dropped off the cents. However, the company, as part of data matching arrangements, did round the payment up to the next dollar so I was a naughty boy. Wrote back and and told the ATO of its own rules. All fine but they asked me to inform he company of that. I replied it was their rules so they can darn well inform the company concerned.

 

Thanks for the explanation @SatayKing

 

No worries @MarkW but bear in mind I can always be wrong - usually am.

As a further random thought, depending of the size of funds involved, e,g, SMSF assets, personal taxable income, etc, I start to wonder if the difference in franking may be considered as not being material and no action necessary. Probably a quick email to the firm which does the numbers may suffice.

Wish my brain would stop. This stuff hurts it.

 

Need someone to do the brain work for us.

From QVE;
"The Company’s 2018 Annual Results were prepared and signed off using a corporate tax rate of 27.5% (being the legislated tax rate at the time of signing). The 2.5% change in tax rate is not material for the 2018 Annual Results and will be captured as an under provision in the 2018-19 year."

also QVE

"Based on a dividend of $100 franked at 27.5% the franking credits for the dividend were $37.93. For the same dividend of $100 franked at 30%, franking credits will be $42.86. This change does not impact the amount of any cash payment received or the number of shares issued under the DRP."

So (if I understand) the LIC will have to pay the ATO the extra tax and the shareholders will received the extra franking credits assocaited. Hopefully the information from QVE is a) accurate and b) able to be applied to the other LICs caught in this.

glad we are all working on keeping things on track in the ETF thread.

 

At least yours still functions.

 

Are ETFs creating the mother of all opportunities?

https://www.researchgate.net/publication/327454540_The_Active_World_of_Passive_Investing

 

Let me get this straight:

1. Government introduces changes to company tax: 27.5%
2. Companies adjust dividend franking accordingly
3. Government changes their mind
4. All dividend recipients now have incorrect tax returns
5. Government goes after all "fraudsters"

Doesn't sound fair.

I'd hazard a guess that we (propertychatters) are probably taxed heavily in comparison with the general population and I agree with @SatayKing about staying on the right side of the ATO. My personal experience is that the ATO will act as judge, jury and executioner ('We are not mongrels or *******s': Jordan defends ATO staff as he announces tax review trial) once they "think" they have you, no matter how wrong they are. Improvements in technology will make it almost impossible to avoid tax - even the dodgy Asian restaurants that accept "cash only" will get stung when they claim their profits are $50 a day when they have 300 customers an hour. I'd like to see it retrospectively enforced too because they make a lot of money.

 

Gotta love the personal touch from Vanguard...

Re: Total World ex-Australia ETF

Thank you for contacting Vanguard.

Vanguard regularly reviews our product offering to ensure we are meeting the requirements in the market. In the last 12 months, Vanguard has launched 8 new ETFs into the market.

We thank you for your feedback and this will be provided internally for future product discussions.

If we can be of further assistance, please do not hesitate to contact Vanguard Client Services on 1300 655 101, between 8.00am and 6.00pm, Monday to Friday, Melbourne time, or alternatively, via return e-mail.

 

@Zenith Chaos wouldn't get too annoyed about it. Sure it's irritating but it'll be sorted somehow. Maybe a rude letter from Mr Tax and the like but it'll work out and probably the majority of us minnows can sleep easy. The bigger players have got the dosh to pay someone to fix it on their behalf so I wouldn't shed tears over them.

 

So no @Snowball EFT any time soon then?

 

When it happens it will be known on PC as "the snowball"

 

Just got the same message word for word. Hopefully the email wasn't binned =/

 

I got the same which is why I usually phone them. Included in recent ETF releases is Minimum Volatilty, Value, Sunstainability etc some of which are struggling to gain traction. You’d Think a Total World Ex-Aus Shares ETF would be more popular than some of these niche ETFs?

 

Interesting to hear Kerr Nielsen on investing and in particular ETFs

Kerr Neilson: Investment Principles, Risks and Opportunities

 

“Yes, you can focus on growth, but what you should really be doing is focusing on cashflow”
(There are many other great comments/quotes from the interview). Interesting comments about technology and what's to come.

 

Sorry just driving by, but would this benchmark be significantly different to vgs'?