Some managed fund distributions include capital gains. Judging from
the ATO web pages on the subject, these are subject to CGT, and the
calculations are performed as if the capital gains were from any other
CGT event. That means that past capital losses can be subtracted from
them.
Is this correct?
If so, what's to stop a person: selling their managed funds (which are
currently in the red), thereby making a capital loss; reinvesting the
cash in either the same fund, or something similar; and then deducting
this year's loss from any capital gains in distributions for the next
few years, making them effectively tax-free?
(I've no doubt that this would constitiute a 'wash transaction' if its
only purpose was to reduce tax, but it would also happen when moving
between funds for other reasons.)
-- Phil
