Withdrawal and Disposal of units

Capital gains or losses related to your units.

Reece Frazier avatar
Written by Reece Frazier
Updated over a week ago

A withdrawal or transfer of your units will constitute a disposal for tax purposes. If the unit price rises above or falls below the unit price paid to acquire the unit, you may make a gain or loss; any of this will be treated as a capital gain or loss or as ordinary income for tax purposes, depending on your circumstances.

You should include any realised capital gain or loss on disposal of your units in the fund in calculating your net capital gain or loss. A net capital gain will be included in assessable income, and a net capital loss will be offset only against capital gains. If you do not have any capital gains, the capital loss may be carried forward for offset against capital gains of subsequent years but may not be offset against ordinary income.

As an Australian resident investor, you may be entitled to the Capital Gain Tax (CGT) discount in respect of this capital gain if the units have been held for over twelve (12) months. You may be eligible for the 50% CGT discount (where you are an individual or trust) or a 33 1/3% CGT discount (where you are a complying superannuation fund) in respect of the capital gain.

Any available capital losses you incur reduce the capital gain before the remaining net capital gain is discounted in the hands of the investor. Capital losses can only be used to reduce your capital gains.

Where units are held as part of a business of investing or for the purpose of profit-making by sale, gains realised may constitute ordinary income and losses realised may constitute allowable deductions.

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