Tax effectiveness of a SMA
Invest professionally in direct shares, without the hassles
Separately Managed Accounts (SMAs) can offer many different tax advantages when investing in direct shares.
With an emphasis on flexibility, SMAs often offer a customisable alternative to a unit trust structure, allowing for individual tax packaging and easily managed tax consequences regarding CGT matters. SMAs also offer real time reporting, and as a result, reduced administration at tax time.
Some of the key tax benefits of investing in a SMA include:
The benefits of direct share ownership
Owning shares directly enables investors to retain control over their tax position. For example, there are no embedded capital gains hidden within the investment. They also have the ability to tailor their portfolio to suit their individual circumstances.
Tax consequences easily managed
Capital Gains Tax (CGT) consequences are easily managed. This includes distributions of realised CGT, tax free and tax deferred when calculating CGT positions. In addition, your individual tax circumstances are able to be optimised with the use of tax parcels.
As data is available from the close of business the day before, you can see your tax positions instantly (with the exception of Listed Property Trusts and Exchange Traded Funds that calculate final income after the end of the financial year). If desired, your accountant can also be given access to detailed, real-time reporting – improving the efficiency of the taxation process.
Reduced Administration for investors and advisers
Investing regularly into a portfolio of shares can result in significant amounts of paperwork. For example, keeping all relevant documentation in order and dealing with corporate actions.
Within a SMA, all administration and paperwork normally associated with a direct share portfolio is taken care of by the SMA provider, helping to reduce the administration burden.
In addition, it is easy for investors to move existing shareholdings into a SMA via an ‘inspecie transfer’, and add to their investment via direct debit or BPAY.
Using the internet, investors and their adviser can monitor the performance of a SMA and, at the click of a button, get an up-to-date report on their account.
Tax reporting
There can be quite a bit of work involved at tax-time, particularly where there is a trail of regular purchases as part of a regular contribution strategy. As the SMA transacts on your behalf, the tax base of the shares you hold automatically adjusts with each trade and all dividend payments are recorded and paid to your account.
Complete and concise records, available via the internet at any time, simplify the preparation of tax returns for you and your accountant.
The benefits of direct share ownership
Owning shares directly enables investors to retain control over their tax position. For example, there are no embedded capital gains hidden within the investment. They also have the ability to tailor their portfolio to suit their individual circumstances.
Tax consequences easily managed
Capital Gains Tax (CGT) consequences are easily managed. This includes distributions of realised CGT, tax free and tax deferred when calculating CGT positions. In addition, your individual tax circumstances are able to be optimised with the use of tax parcels.
As data is available from the close of business the day before, you can see your tax positions instantly (with the exception of Listed Property Trusts and Exchange Traded Funds that calculate final income after the end of the financial year). If desired, your accountant can also be given access to detailed, real-time reporting – improving the efficiency of the taxation process.
Reduced Administration for investors and advisers
Investing regularly into a portfolio of shares can result in significant amounts of paperwork. For example, keeping all relevant documentation in order and dealing with corporate actions.
Within a SMA, all administration and paperwork normally associated with a direct share portfolio is taken care of by the SMA provider, helping to reduce the administration burden.
In addition, it is easy for investors to move existing shareholdings into a SMA via an ‘inspecie transfer’, and add to their investment via direct debit or BPAY.
Using the internet, investors and their adviser can monitor the performance of a SMA and, at the click of a button, get an up-to-date report on their account.
Tax reporting
There can be quite a bit of work involved at tax-time, particularly where there is a trail of regular purchases as part of a regular contribution strategy. As the SMA transacts on your behalf, the tax base of the shares you hold automatically adjusts with each trade and all dividend payments are recorded and paid to your account.
Complete and concise records, available via the internet at any time, simplify the preparation of tax returns for you and your accountant.
For more information regarding investing in a SMA Direct Share Service, please email Steve Blizard for more details, or phone our Client Services Centre on 08 9379 3555