Firstly, excuse my ignorance... however, I am searching for some guidance on the taxing of managed funds. Yes, I know, I should seek advice from an expert.
I recently (just over a month ago) bought into a well known managed fund (which invests predominantly in international stocks).
My investment was $25,000.
A couple of weeks ago, when the fund declared it's distribution (ex-distribution), my investment dropped to ~24,000 (with the distribution being ~1,000). I thought, in my head, that's fair enough. I invested $25,000 (the market hasn't moved) and I am still sitting at 24,000 in the fund - and a prospective distribution of 1,000 (still a total of $25,000). No problem... all makes sense.
However, I am now faced with a tax bill for the $1,000 distribution which is mostly made up of Capital Gains (CGT).
Did I just commit a cardinal sin for investing in a managed fund too soon before the end of the financial year? Do people instinctively know that this should never be done?
I am now up for a tax bill of over $350 - for an investment that hasn't done a thing for the last four weeks.
Am I missing something? Or is this the often talked about downfall of managed funds?
I am now down over 1.4% (350 loss) for buying into the fund at the wrong time... I feel like I should have just written the cheque to the tax office...
Am I missing something? In my head... I am still like surely this can't be right...
