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Tax implications for various securities

Tax time is a confusing time of year for most investors. ASX has assembled the following table to help identify the tax implications of the various products traded on ASX.

Instalment Warrants Holders will need to consider dividends and associated franking credits (subject to 45 day holding period rule). Some Holders may be entitled to deductions for interest paid. Remember, some Instalment transactions involving shares and warrants may not trigger a capital gains tax event.
Exchange Traded Options Tax assessment is dependent on individual's classification as a trader, a speculator, or as a hedger. Selling options for premiums is treated as income subject to the individual's classification (as above). Buying an option and then exercising into the underlying share adds to the cost base for CGT purposes. The length of time shares are held for will determine the CGT rate, and remember the holding period rule in relation to dividends.
Listed Investment Companies (LICs) Dividend payments are typically fully franked and capital gains are managed by the fund manager to minimise cost to investors.
Equities (shares) Shareholders need to keep a record of the date and value of share parcels they acquire. When shares are sold they are generally subject to capital gains tax (CGT). The length of time shares are held for will affect the CGT rate applicable. Shareholders can receive franked dividends. These carry imputation credits that may potentially reduce tax payable on dividend income. Shareholders should consult their taxation adviser regarding the deductibility of interest on margin loans.
Bonds and Hybrids The sale or redemption of bonds is generally not subject to CGT, but is assessable for income tax.  However, there are CGT considerations following disposal of shares that are received form conversion of convertible notes.  It is important to note that there are distinctions in the taxation treatment for convertible notes issued after 14 May 2002.
International Shares via ASX World LinkŪ ASX World LinkŪ service provides dividend and transaction information in Australian dollars to help in preparation of tax returns. Investors may be able to claim a foreign tax credit in respect of all or part of the dividend withholding tax amount.
Infrastructure funds A portion of the income (distributions) is typically tax deferred until the holder sells their units.
Property trusts A portion of the income (distributions) is typically tax deferred until the holder sells their units.
Pooled development funds (PDFs) These funds display some unique taxation characteristics and investors are advised to seek professional advice. Generally, capital gains and dividends are tax-free. The PDF only pays 15% corporate tax rate. Dividends carry franking credits at the 30% rate.
Exchange Traded Funds (ETFs) Dividends from ETFs typically have franking credits attached to them. Capital gains are managed by the fund manager in order to minimise costs to investors. Low portfolio turnover means Indexed ETFs have low capital gains tax consequences.
Absolute Return funds Capital gains are managed by the funds manager to minimise cost to investor. Dividends may be fully franked.

For further information on shares and their tax implications, please refer to the Australian Tax Office (ATO) publications:

This information is intended to provide a general summary only.   ASX does not offer, nor purport to offer, financial product advice or advice on taxation.  Whilst every care has been taken in producing this information, no warranty is given or implied as to accuracy.   To the extent permitted by law, no responsibility for any loss (whether in negligence or otherwise) occasioned by anyone acting or refraining from acting as a result of this information is accepted by ASX.

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