Optimum Vanguard Allocation

Discussion in 'Shares & Funds' started by Kelly88, 9th Dec, 2019.

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  1. dunno

    dunno Well-Known Member

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    Are you sure the annual tax statements tracks your personal CGT position. How do they know which parcels you are applying the sale against? Whilst you can look back on a transaction history with a managed fund, I don't think they maintain the AMIT adjustments to capital base for each transaction do they?

    With a bit of luck the new Vangaurd portal may assist in the future, but for now as I understand it, the cost base for every transaction needs to be kept personally and nominated/identified at the time of sale and calculating CGT. That's reasonably intensive, especially with AMIT adjustments, without a wrap platform. I'm not sure if share sight is capable of handling cost base per parcel for managed funds as a cheaper option to the wrap platforms?

    If I have this wrong - I would be interested to see a tax statement with the personal CGT amounts included. I just don't know how they could do this unless the withdrawal request is for full redemption or requires you to identify the parcels of units you are selling. I have never seen in a PDS where they nominate a method for allocating redemptions like LIFO or FIFO, its left silent, so as to allow customers to make their own tax choices and they don't ask which parcels you want to sell on the redemption forms so I don't know how they can calculate.

    One of the biggest bonuses I see for the new Vanguard portal would be its potential to handle the personal cost base recording for multiple parcels and allow you to identify the units being sold - Then they could do the personal CGT calculations for you. I've never owned a managed fund, so have never seen a first hand statement Maybe somehow they do track the tax for you and I have interpreted what I have read wrong. Please educate me
     
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  2. DoggaPP

    DoggaPP Well-Known Member

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    The scenario I was addressing was the original one posted by Kelly88 regarding a friend wanting to park money in a wholesale fund (and presumably add a bit to it maybe?) for a short term then withdraw the whole lot to buy shares – a full redemption scenario. As you have pointed out, a full redemption scenario is relatively easy to report tax wise. Also, in its current form, Vanguard’s customer managed fund portal keeps all your transactions for you in detail (date, price, units etc) and are downloadable so there is no need to keep BPAY paperwork. Of course Vanguard cannot track anyone’s personal CGT but it can supply the necessary number to easily show a capital gain (or loss) in a full redemption. Maybe I should have spelled this out better for Kelly88?


    However, you also raise a different scenario to Kelly88 – a scenario which will be mine to deal with in retirement and when I start drawing down parts of the fund yearly. Not so straight forward as just redeeming the whole lot. Vanguard states thus:

    If you disposed of units during the year, please be advised you will no longer receive a CGT statement and CGT guide. You can still calculate your current year’s capital gain or loss position resulting from the disposal of your Vanguard units by using information provided in your transactional history statement and information contained in the AMMA tax statement. You will need to combine any capital gain or loss you make from your disposal of any units during the year, with the capital gain information from your AMMA tax statement in completing Question 18 of your tax return.

    I rang Vanguard about this info before I opened my wholesale account as it confused me (easy to do I know!). Vanguard talked me through it. The withdrawal form gives three options of withdrawal 1.Full redemption 2.Unit redemption 3.Dollar amount redemption - and Vanguard advised me that for taxation purposes once drawing down, that selecting the Unit redemption withdrawal option and doing a single yearly partial redemption makes the job much easier when you then match your withdrawn units to whatever purchased units you want (FIFO or whatever suits your tax situation for the year). Using your downloadable tax statement in conjunction with your downloadable transaction statement will provide the info you need to submit your CGT info inside Managed Funds section of MyGov for that FY. So, all this info theoretically seemed comprehendable enough, so I then ran it past my accountant who confirmed that this was the gist of it and that even though I could do this myself in MyGov, it was very easy for her to take the statements and “do it with her eyes shut” – but she did say that she would have a discussion with me yearly about exactly what units off the transaction statement we should select (rather than just choosing vanilla FIFO or LILO) for the best tax advantage in any given year. She and I would also need to keep a record of which units we had used year on year so as to not double up. She stated that this particular activity is especially important in the first couple of years of early retirement to help towards mitigating any sequencing risk that may emerge.

    Anyway, maybe my understanding is too simplistic – I’m sure you’ll set me to rights


    Also, here is the link to publicly available tax/CGT info on Managed funds for Vanguard Frequently Asked Questions: Annual Tax/Capital Gains Statements
     
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  3. Kelly88

    Kelly88 Well-Known Member

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    @DoggaPP : my friend just called Vanguard and they said: if you have 110 in one fund, you can't transfer 10K to another fund. You can only do that if you have 200K and then transfer 100K.

    Maybe they might allow it later once you have account with them ?
     
  4. DoggaPP

    DoggaPP Well-Known Member

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    Well .... I think we can now all safely assume that after your friend's phone call that it will very soon no longer be a loophole.
     
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