Your 2022-23 tax guide for investments

With the end of financial year approaching, it is important to ensure all your financial records are in order and you are aware of any tax liabilities.

Here are four tips to ensure you are prepared when lodging your income tax return.

1. Identify all your investments

Understand and have a record of all your asset holdings. Spend some time to do a full audit of your investment holdings so you’re fully across your portfolio, especially if you have investments spread across different investing platforms and asset classes to ensure tax liabilities are not inadvertently missed.

2. Calculate your tax liabilities

Declare capital gains and losses from the disposal of shares, managed investments, properties, and crypto assets.

For individuals, capital gains tax (CGT) is payable at your marginal tax rate on profits you’ve made from sold investments. Net capital gains are calculated after considering your total acquisition cost, including any costs associated with buying, holding, and selling your investment.

You’ll also need to provide a detailed record of distributions paid or attributed from each investment you owned in 2022-23 in your next tax return.

3. Tax loss harvesting

A way of reducing CGT is to consider selling investments before 30 June that have made a loss since you purchased them. These losses, including losses carried over from previous tax years, can be used to offset gains made on other investments that have been sold during the financial year. As well as reducing CGT liabilities, the sale of loss-making investments can also free up money to invest elsewhere.

But you may want to seek professional advice before taking any action in this regard, as investments currently recorded in your portfolio as loss-making may become profitable in the future.

4. Keep track of allowable deductions

Allowable tax deductions can be offset against investment income. You may be able to claim a deduction for expenses you incur in earning interest, dividend, or other investment income.

The ATO allows investors to claim a deduction for interest charged on borrowed money to buy shares or other investment assets. You can also claim deductions on investment account-keeping fees and investment management fees or retainers.

Furthermore, you may be able to deduct a portion of other costs incurred in managing your investments such as depreciation of your home computer, the cost of internet access, specialist investment journals and subscriptions etc.

For more information contact the My Fortress team.