Dividends and Tax for Noob Investors

• 

  k-rokfm on 15/08/2022 - 12:25

  +3

  Not a tax agent , please see them for actual advice.

  Yes as your dividends are coming in they are counted as income, you will need to pay tax on any income.

  Your 5% loss however isn’t calculatable for anything until you “cash it in” and sell your investment. This won’t be calculated until that point.

• 

  wei13 on 15/08/2022 - 12:29

  +4

  Since you said dividends, I am assuming your investment was in listed shares.
  1. The dividends you received from the shares you bought is assessable income, taxed at your marginal rate.
  2. If you made an actual loss by selling the shares at a lesser price, then you have made a Capital Loss. That loss can only be used to offset other capital gain you have, and if you don't have other capital gain, be carried to later years to offset future capital gains. The capital loss cannot be used to offset against your dividend income or normal salary income.

• 

  dust on 15/08/2022 - 12:29

  +2

  Paper gains/losses aren't taxable. No capital gains event is triggered unless you sell.

  Would recommend you learn a bit more about tax before investing any further.

  • 

    jv on 15/08/2022 - 12:40

    Paper gains/losses aren't taxable.

    They are sometimes…

    • 

      djkelly69 on 15/08/2022 - 12:45

      +1

      Go on…

      • 

        jv on 15/08/2022 - 13:07

        Takeovers and mergers…

• 

  tomleonhart on 15/08/2022 - 12:37

  +1

  In my understanding it's a no. Dividend is classified as income where as share price gain/loss is capital gain/loss. You can not use capital loss to offset your income, you can only use capital loss to offset your capital gain. All gain / loss have to be realised before they're either classifed as gain or loss.

  https://www.ato.gov.au/Individuals/Capital-gains-tax/Shares-….

• 

  ESEMCE on 15/08/2022 - 13:00

  You don't make a loss until you sell.

  Once you sell, get a professional involved. The costs are relatively low (and you can claim it in the following year) and it's too complicated and the risks of getting something wrong are too high.

  • 

    jv on 15/08/2022 - 13:07

    You don't make a loss until you sell.

    Not true… A merger can trigger a taxable event for example.

    • 

      AndyC1 on 15/08/2022 - 13:25

      +1

      There are a few more as a company buyout or a company split can also trigger a taxable event if you get any physical money from the event.

• 

  AndyC1 on 15/08/2022 - 13:22

  -2

  Dividends are usually franked and therefore you will be 39% ahead assuming the franking rate of 39% and have to pay tax on 39% of $5K.

  See your accountant for how to legally minimize your tax bill.

  • 

    Mr Haj on 15/08/2022 - 14:18

    Why would you assume a franking rate of 39%? Don't most Australian companies either have fully franked (100%) or no franking credits (tax exempt companies such as CSL)?

    • 

      netjock on 15/08/2022 - 15:20

      He is talking about if 100% full franked and the company pays 30% tax it appears like 39% (I haven't done the exact calc) gross up of the net dividend.

      Nobody calculates it as +39% of the net dividend but hey it is OzB maths. No exam and no job at the end upon passing.

      • 

        avoidfullprice on 15/08/2022 - 19:47

        His comments are normally based on random thoughts and therefore following it will make you 69% different to the 31% who won’t follow it.

        Seek advice.YMMV

        /s