How Sharesight makes ETF tax admin easy

Sharesight makes tax time easy, and with our new and improved handling of ETF distributions and more powerful Australian Taxable Income Report, things just got even easier.

ETFs are an admin headache at tax time

ETFs (Exchange Traded Funds) are a type of investment fund that can be bought and sold on stock exchanges. These funds issue distributions (in essence, ‘dividends’) to shareholders throughout the financial year for any income earned by the fund. ETFs are structured as unit trusts, which impacts how the income earned (dividends, realised capital gains, interest, etc) is split across different categories for reporting purposes. This increases the complexity of completing your tax return for the Australian Tax Office (ATO).

Here is an ETF income distribution statement for a popular ASX-listed ETF (VAS.ASX - Vanguard Australian Shares Index ETF). Just look at that complexity:

How Sharesight makes ETF tax admin easy

Throughout the year, ETF managers will typically provide quarterly income distribution estimates from their operations. These are already automatically captured by Sharesight, but as these are estimates, they need reconciling against the year-end income statement provided by the ETF manager.

We’ve made significant improvements in how Sharesight handles the data underpinning ETF income distributions and how we report these for Australian investors. Read on for the details:

Default all ETF distributions to Trust Income

We’ve updated the way we handle ETF distribution income to consider it ‘trust income’ by default. This change is really important, because distributions from ETFs for Australian investors need to be recorded in ‘Section 13 - Partnerships and Trusts’ of the income tax return for individuals (supplementary section), which differs from ordinary dividend and interest income which would be entered in the standard tax return for individuals - in Section 10 (interest) and Section 11 (dividends).

Fields for all required ETF distribution components

We’ve updated the fields available for recording a payment within a holding to include all the fields investors need to accurately record their ETF distributions.

We get end of year ETF income distribution details directly from Computershare

(Hey Link Market Services and BoardRoom, we would love to get this data from you too!)

End of year component details from Computershare for FY2016/17 are now available within Sharesight. We hope to have FY2017/18 data loaded as soon as it is available (likely August) - saving you the time required to enter these from your end of year income statements.

We tell you if ETF distributions are incomplete

We now display a warning icon alongside unconfirmed transactions for each ETF payout where the components that make up the distribution have not been finalised at year end. There has been some confusion in the past over whether the quarterly ETF income figures were correct, and as these are only estimates,we now clearly indicate when this occurs in order to avoid any confusion.

We even tell you when end of year tax details are available

As soon as end of financial year component details are available, we now display an alert against the distributions involved so you can action the information.

We also make it simple to update your distribution with end of year details

Final distribution details can differ from quarterly estimates - so we’ve made it easy to reset a confirmed payout if you’ve confirmed it during the year and it doesn’t match the end of financial year taxation statement.

ETF distributions are correctly attributed to the year they are earned

If an ETF distribution is paid in (for example) July, but the distribution payment is for income earned by the ETF in the previous financial year, it needs to be included in the previous financial year on your Australian income tax return. We’ve improved the way we handle this, in many cases handling it automatically.

Sharesight's handling of ETFs now more powerful with new taxable income report

Sharesight’s new Taxable Income Report now provides field references to the relevant sections on the Australian income tax return for individuals and income tax return for individuals (supplementary section), as well as the totals required for the income tax return based on non-trust and trust income -- making completing your tax return easier than ever.

Sharesight makes tax time easy

Join thousands of Australian investors already using Sharesight to manage their investment portfolios. To get started for FREE, simply sign-up and import your shares and managed funds. Then watch as corporate actions such as dividends, ETF distributions and stock splits are automatically recorded towards your tax return. We’re confident that you’ll agree Sharesight is the best share portfolio tracker available today.

Need help?

• Sharesight Taxable Income Report
• Ask in our Sharesight Community Forum

FURTHER READING

• Record-keeping requirements for Australian investors
• Capital gains tax calculator for Australian investors
• Offset your capital gains by tax loss selling before EOFY