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The Responsible Entity of The Portfolio Service Investment Essentials is Questor Financial Services Limited ABN 33 078 662 718

AFSL No 240829 Locked Bag 4004 Queen Victoria Building NSW 1230 Telephone 1800 221 151 Facsimile 1800 000 948

Part of the IOOF group

The Portfolio Service Investment Essentials

The Portfolio Service

Tax guide 2013

2

This guide has been prepared to help individual

Australian resident taxpayers complete their

2013 tax return.

To complete your tax return you will need the

following:

• copy of the Investment Essentials (the Plan)

‘Consolidated taxation statement for the financial

year ended 30 June 2013’ (taxation statement)

• a copy of the Plan ‘Statement of capital gains

for the financial year ended 30 June 2013’

(CGT statement), where applicable

• copies of schedules from the Australian Taxation

Office (ATO):

— ‘Tax return for individuals 2013’

— ‘Tax return for individual (supplementary

section) 2013’

— ‘Individual tax return instructions 2013’

— ‘Individual tax return instructions supplement

2013’

— ‘Guide to capital gains tax 2013’ and ‘You and

your shares 2013’ if you have capital gain

amounts or received franking credits as part

of your distribution.

If you have received income from other investments

held outside the Plan, you will need to combine

the information from those investments with the

information we have provided.

Important information

This guide has been prepared by Questor Financial

Services Limited ABN 33 078 662 718 AFSL No

240829 (Questor/we) and contains general

information only. Questor is not a registered tax

agent and this information is not a substitute for any

instructions from the ATO. You should consider the

appropriateness of this information, having regard

to your individual circumstances. Australian taxation

laws are complex so we recommend you seek taxation

advice from a registered tax agent before making

any decision based on the information in this guide.

Although the information in this guide is believed to

be correct at the time of compilation, no warranty

as to the accuracy or reliability of the information is

given and no responsibility arising in any other way for

errors or omissions in the information is accepted by

Questor, its officers, employees and agents.

Your tax return and your statements

In your tax return, you must declare income that you

were entitled to during the period 1 July 2012 to

30 June 2013 (the financial year). This may not

coincide with the actual cash distribution you have

received during the same period.

Your ‘Annual reporting package 2013’ includes the

following statements and, where applicable, you need

to refer to them to complete your 2013 tax return.

1 The taxation statement summarises all of the

income entitlements on the investments held in the

Plan, the deductible amount of expenses paid from

the Plan as well as any relevant amounts of tax paid

and tax offsets for the financial year.

2 The CGT statement details all capital gains/losses

on the disposal of investments held in the Plan

during the financial year. You will only receive this

statement if you have disposed of investments.

3 The ‘Gain and Loss derived on disposal or redemption

of traditional securities for financial year ended

30 June 2013’ details all revenue gains/losses on

the disposal of traditional securities held in the Plan

during the financial year. You will only receive this

statement if you have disposed of investments.

All items required to complete your tax return are

detailed in ‘Part A: Summary of Tax Return’ of the

taxation statement.

For capital gains items, you are required to combine

the capital gains items detailed in ‘Part A: Summary of

Tax Return’ with the relevant amounts from the CGT

statement.


3

Understanding the components of your consolidated taxation statement

Part A – Summary of tax return

This section of your taxation statement highlights

the major components of your distribution. If you

have straightforward circumstances, this information

should help you complete your tax return.

The tax return label reference in Part A relates to

the ‘Individual tax return 2013’ and ‘Tax return for

individual (supplementary section) 2013’.

The amounts shown in Part A of your taxation

statement should be included in your tax return

against the corresponding tax return labels shown on

your taxation statement.

A breakdown of the distribution components is shown

in Part C of your taxation statement.

1.Label10L–GrossInterest

This item represents the total interest income that

has been paid or credited to your account from direct

investments.

2.Label11S–Unfrankedamount

This item represents the total of unfranked dividends

that have been paid or credited to your account from

direct investments in Australian companies.

3.Label11T–Frankedamount

This item represents the total of franked dividends

that have been paid or credited to your account from


4.Label11U–Frankingcredit

This item represents the amount of franking credits

(including cents) attached to franked dividends from


Franking credits are Australian tax offsets that you

may be entitled to claim. Your entitlement to claim

franking credits as a tax offset against your Australian

tax liability is subject to you satisfying the ‘holding

period rule’. For further information on the holding

period rule, you should consult the ATO publication

‘You and your shares 2013’.

5.LabelD8–Dividenddeductions

This item represents all expenses incurred in respect

of deriving dividend income. It is included if you

received a listed investment company (LIC) capital

gain amount in respect of LIC dividends received

during the financial year. Where a LIC pays a dividend

that includes a LIC capital gain, you may be entitled

to an income tax deduction. This amount is detailed in

Part D of your taxation statement.

6.Label13U–Shareofnetincomefrom

trusts,lessnetcapitalgains,foreignincome

andfrankeddistributions

This item includes interest, unfranked dividends and

other income that have been paid or credited to your

account from your investment in Australian unit

trusts. It excludes net capital gains, foreign income

and franked distributions, which are shown separately

on your taxation statement.

7.Label13C–Frankeddistributions

fromtrusts

This item includes franked dividends and franking

credits that have been paid or credited to your

account from your investment in Australian unit

trusts.

8.Label13Y–Otherdeductionsrelating

todistributions

This item is the tax deductible expenses charged to

your account in the income tax year. These expenses

may be deducted against the distribution income you

received. If you have incurred additional deductible

expenses in relation to your distribution income, these

should also be disclosed at this label.

4

9.Label13Q–Shareoffrankingcreditfrom

frankeddividends

This item includes your share of franking credits

(including cents) attached to the franked dividends

from trusts. Franking credits are Australian tax offsets

that are attached to franked dividends from trust

distributions you received. Your entitlement to claim

franking credits as a tax offset against your Australian

tax liability is subject to you satisfying the ‘holding

period rule’.

For further information on the holding period rule,

you should consult the ATO publication ‘You and your

shares 2013’.

10.Label13R–Creditfortaxfilenumber

(TFN)amountswithheldfrominterest,

dividendsandunittrustdistributions

This item represents the amount of tax withheld from

income (interest, dividends and unit trust distributions

paid or payable) received by the trust and/or the Plan

if you did not supply your TFN.

11.Label13A–Shareofcreditforamounts

withheldfromforeignresidentwithholding

This item includes amounts withheld from some

payments to specific recipients due to the operation

of the foreign resident withholding regime. Like other

tax credits, the credits for foreign resident amounts

withheld may be offset against your Australian tax

liability on taxable income.

12.Label18H–Totalcurrentyear

capitalgains

This item is the total amount of capital gains before

any capital gains tax (CGT) discount has been applied.

This amount also includes foreign capital gains.

13.Label18A–Netcapitalgain

This item is the net capital gain distributed to you.

The items making up this amount are detailed in

Part B of your taxation statement.

Capital gains or losses derived from other sources also

need to be taken into account when completing this

label. If capital losses are to be applied to a discount

capital gain, you should offset these losses against

the gross capital gains first before applying the CGT

discount. The discount rate that has applied to your

discount gains can be found in the section ‘Capital

Gains information’ below, with reference to your

investor type on your taxation statement.

Please refer to the ATO publication ‘Guide to capital

gains tax 2013’ for further information.

14.Label19K–Foreignentities-CFCincome

This item applies to income and gains of foreign

companies for which you had a direct or indirect

controlling interest.

For more information on CFC measures, please refer

to the ATO publication ‘Foreign income return form

guide 2013’.

15.Label20E–Assessableforeignsource

income

This item is income from your overseas investments.

It comprises of assessable foreign dividends, foreign

interest and all other assessable foreign income

(including foreign tax withheld on income not already

shown on your tax return) for which you are liable

to pay Australian income tax. It excludes foreign net

capital gains (which are to be included at label 18).

If you have foreign income or losses from other

sources, you need to take these into account when

completing this label.

For further information, you should refer to the

instructions in the ‘Individual tax return instructions

supplement 2013’.

16.Label20F-Australianfrankingcredits

fromaNewZealandfrankingcompany

This item is the franking credits arising from tax paid

in Australia by New Zealand franking companies. The

dividends, net of the Australian franking credits from

New Zealand franking companies, are included as part

of your foreign source income (per label 20E).

To check your eligibility to claim these Australian

franking credits, please refer to the ATO publication

‘You and your Shares 2013’.


5

17.Label20M–Othernetforeignsource

income

This item takes into account all foreign deductible

expenses incurred in earning foreign sourced income.

The sum of foreign deductions is to be subtracted

from your assessable foreign sourced income

(shown at label 20E) to arrive at your other net

foreign source income.

If you have no foreign income deductions, then the

amount at label 20M is the same as label 20E.

For further information, please refer to the

instructions in the ‘Individual tax return instructions

supplement 2013’.

18.Label20O-Foreignincometaxoffset

This item is your total foreign income tax offset

(including cents). The amount of the foreign income

tax offset represents the amount of foreign income

tax withheld by foreign investment companies, in their

own country, on income received.

If your foreign income tax offset from all sources for

the year is no more than $1,000, you can claim this

amount in full.

If you are claiming more than $1,000, you should refer

to the ATO publication ‘Guide to foreign income tax

offsets’ to work out your entitlement.

Part B – CGT information amounts

This section of your taxation statement gives you a

detailed breakdown of capital gains that you received

from trust distributions.

CGT concession and tax deferred amounts may not

need to be included in your tax return. However,

these components may affect either the cost base or

reduced cost base of your investment and, in some

cases, may be required to be included in your tax

return.

For further information regarding the treatment

of these amounts, you should refer to the ATO

publication ‘Guide to capital gains tax 2013’.

Part C – Income components

This section of your taxation statement gives you

a detailed breakdown of your distribution income

components and capital gain/loss on the sale of

your holdings relating to distributions. Information

pertaining to the other deductions relating to

distributions is provided above at item 8 and is not

covered any further in this guide. The additional

information in Part C of your taxation statement may

be required to complete your tax return.

Part D – LIC capital gains information

A LIC is an Australian resident company, listed on the

Australian Securities Exchange (ASX), which carries

on the business of managing an investment portfolio.

LICs offer investors exposure to a diverse and

professionally managed portfolio of assets, similar

to those found in many unlisted managed funds.

Examples of assets may include Australian shares,

international shares and infrastructure assets.

To determine whether an investment is classified as a

LIC, investors should check the LIC classification list

which is published on the ASX website.

If a LIC pays a dividend to you that includes a LIC

capital gain amount, you may be entitled to an income

tax deduction.

You can claim a deduction if:

• you were an Australian resident when a LIC paid

you a dividend, and

• the dividend included a LIC capital gain amount.

A LIC paying a dividend will advise its shareholders

how much of the dividend is attributable to a LIC

capital gain (the attributable part).

An individual, trust or partnership can deduct

50 per cent of the attributable part advised by a LIC.

A complying superannuation entity, first home saver

account trust or life insurance company can deduct

33 1/3 per cent of the attributable part advised by

a LIC.

6

Exampleofconsolidatedtaxationstatementforthefinancialyearended30June2013

Part A: Summary of tax return

Amount Tax return label

Taxreturn

Gross Interest $5,479.85 10L

Dividends - unfranked amount $1,378.11 11S

Dividends - franked amount $18,403.52 11T

Dividends - franking credits $12,357.93 11U

Dividend deductions $171.07 D8

Taxreturn(supplementarysection)

Share of net income from trusts, less capital gains, foreign income and franked distributions

$13,206.84 13U

Franked distributions from trusts $77.46 13C

Other deductions relating to distributions $8,558.55 13Y

Share of franking credit from franked dividends $49.80 13Q

Credit for tax file number amounts withheld from interest, dividends and unit trust distributions

$264.94 13R

Share of credit for amounts withheld from foreign resident withholding $930.98 13A

Total current year capital gains $492.29 18H

Net capital gain $351.96 18A

CFC income $33.20 19K

Assessable foreign source income $3,484.84 20E

Australian franking credits from a New Zealand franking company $332.97 20F

Other net foreign source income $3,484.84 20M

Foreign income tax offsets $2,216.05 20O

Part B: Capital gains tax information amount

Amount

Capital gains - discount method $280.66 (grossed up amount)

Capital gains - indexation method $113.43

Capital gains - other method $98.20

Totalcurrentyearcapitalgains $492.29

Capital gains tax (CGT) concession amount $276.28

Tax – deferred amounts $516.64


7

Part C: Income components

Income and

expense

Tax paid and

offsets

Taxable

amount

Australianincome

Dividends - Franked (share) $18,403.52 $12,357.93 $30,761.45

Dividends - Franked (trust) $27.66 $49.80 $77.46

Dividends - Unfranked (share) $1,340.76 $1,340.76

Dividends - Unfranked (fixed interest) $0.00 $0.00

Dividends - Unfranked (trust) $18.46 $18.46

Dividends - Unfranked CFI $37.35 $37.35

Interest (fixed interest) $5,479.85 5,479.85

Interest (trust) $1,791.14 $1,791.14

Interest not subject to NRWT $31.81 $0.00

Other income $11,397.24 $11,397.24

TFN Tax Deducted $264.94 $264.94

TotalAustralianIncome $38,527.79 $12,672.67 $51,168.65

Capitalgains

Discounted method (TARP) $42.88 $42.88

Discounted method (NTARP) $97.45 $97.45

Indexation method (TARP) $33.20 $33.20

Indexation method (NTARP) $80.23 $80.23

Other method (TARP) $27.66 $27.66

Other method (NTARP) $70.54 $70.54

Totalcurrentyearcapitalgains $351.96 $351.96

Foreignincome

Foreign source income $1,268.79 $2,216.05 $3,484.84

Attributed CFC income $33.20 $33.20

Australian franking credits from NZ company $0.00 $332.97 $332.97

Assessableforeignsourceincome $1,301.99 $2,549.02 $3,851.01

Othernon-assessableamounts

Tax-exempt $15.37

Tax-free $59.02

Tax-deferred $516.64

CGT concession amount $276.28

Totalnon-assessableamounts $867.31

Totaldistribution $41,049.05 $15,221.69 $55,371.62

Less TFN amounts withheld $0.00

Less Non-resident withholding tax $930.98

Netcashdistribution $40,118.07

Otherdeductions

Other deductions relating to distributions $8,558.55

LIC Deductions $171.07

Part D: LIC capital gains information amount

Amount

Attributable part of dividend $342.14

8

To determine the total current year capital gains and net capital gain amounts which you are required to disclose

in your tax return, you need to combine the capital gains items detailed in the taxation statement with the relevant

amounts from the CGT statement.

For general information on capital gains, you may need to refer to the ATO publication ‘Guide to capital gains tax 2013’.

The following table summarises the types of capital gains details in both the taxation and CGT statements.

Capital

gain/(loss)

calculation

method

Relevant

section

of your

statement

Description

Othercapitalgain

Nominal gain/(loss)

These gains relate to assets held for less than 12 months which were not eligible to apply the indexation method. The entire amount of the gain is taxable.

Discountedcapitalgain

Nominal gain/(loss)

These are capital gains that relate to assets that have been held for longer than 12 months and, accordingly, are eligible for the CGT discount. This amount represents the grossed up nominal gain or loss you have made on the redemptions of investments held for greater than 12 months. The entire amount of the gain has been distributed to you. Nominal gains are eligible for the discount method after the application of any current or carried forward capital losses. For an individual, the appropriate discount factor to apply is 50 per cent. For other CGT discount rates, please see the Understanding the components of your CGT Statement section of this guide below.

Indexedcapitalgain

Frozen Indexed Gain

These are capital gains that are eligible to apply the indexation method. The capital gains amount shown here has been indexed accordingly.

TARPandNTARP

For Australian resident investors, the split between Taxable Australian Real Property (TARP) and non-TARP (NTARP) capital gains can be disregarded for the purposes of completing your tax return.

If you are a foreign resident investor, you may be entitled to an exemption from CGT on capital gains derived from assets that are classed as NTARP. We suggest that you seek professional taxation advice regarding the application of the CGT regime to your own individual circumstances.

Capital gains information


9

Understanding the components of your CGT Statement

For each investment sale recorded on the CGT

statement, it is possible to have an amount in either

the Nominal gain/(loss) column or the Frozen indexed

gain column or both. Where an amount appears in the

Nominal gain/(loss) or Frozen indexed gain column,

this is the amount that needs to be used in respect

of that particular investment sale in determining

your overall capital gains position. Where an amount

appears in both the Nominal gain/(loss) and Frozen

indexed gain columns, you need to make a choice

as to which amount you select, depending on your

individual circumstances.

Once an amount has been selected in respect of each

investment sale, you need to add these amounts along

with the total current year capital gains from trust

distributions (taken from your taxation statement)

and any other capital gains you have made during the

year. This amount needs to be disclosed at tax return

label 18H.

You then need to determine the net capital gain. If

you have selected any amounts from column Nominal

gain/(loss) and have no capital losses, you need to

apply the appropriate discount rate to these amounts

in determining your net capital gain. Where you

have a capital loss (either from the current year or

prior years), these need to be applied first before

discounting any capital gains. The net capital gain

from all sources needs to be disclosed at tax return

label 18A.

Note: If you have any prior or current year capital losses, we recommend that you seek professional taxation advice as to how you apply them.

Assumptions

In calculating the net capital gain or loss on your

redemption of investments, we have made the

following assumptions:

• The first parcel of investments you redeemed

was all or part of the first parcel of investments

purchased. This is referred to as the ‘first in, first

out’ method.

• The application for your initial investment was

made with cash or a cash equivalent.

• The CGT provisions apply to you.

• You have a financial year end for Australian income

tax purposes.

If any of these assumptions do not apply to your

investment, then the calculation of the net capital

gain or loss on the redemption of your investments

disclosed on the CGT statement may not be

appropriate. Again, you should seek professional

taxation advice.

CGTdiscountrates

The table below lists the discount rates used to

calculate your discounted capital gains according to

the entity type listed on your taxation statement.

Entity Discount rate

Company 0.00%

Individual 50.00%

Partnership 50.00%

Superannuationfund 33.33%

Trust 50.00%

10

Capital gains taxation information statement

Examplesofstatementofcapitalgainsforthefinancialyearended30June2013

Investment Date sold Date of

purchase

Units sold Sale

proceeds

Adjusted

cost base

Nominal

gain/(loss)

Frozen

indexed

gain

Investmentoption1

30/11/2012 3/03/2009 150 $900.00 $425.00 $475.00 $475.00

Investmentoption2

12/04/2013 6/06/1996 845 $10,000.00 $7,000.00 $3,000.00 $2,790.00

Investmentoption3

18/01/2013 20/12/2001 745 $8,500.00 $6,250.00 $2,250.00 $2,250.00

Investmentoption4

2/07/2012 1/08/1995 4,000 $7,250.00 $10,475.00 $(3,225.00) —

We have used the figures from the sample statement of capital gains for the financial year ended 30 June 2013 shown

above and the sample Investment Essentials consolidated taxation statement on pages 6 and 7 of this guide to illustrate

how to calculate net capital gains.

We have assumed that there are no net capital losses carried forward from previous years. This is a guide only and

may not be applicable to your personal circumstances. You should seek professional taxation advice.

The sample statement of capital gains for the financial year ended 30 June 2013 shows that the client has incurred

a capital loss of $3,225.00 on the disposal of investment option 4. Capital losses may be offset against capital

gains, such as trust distributions of capital gains and/or arising from the disposal of units/shares, in the order that

minimises your overall net capital gain.

Please note that the sequence in which capital losses have been offset in this example may not necessarily be

suitable in your circumstances.


11

The below information is only applicable to Australian

residents who are not subject to Taxation Of Financial

Arrangement (TOFA). Holders who are subject to TOFA

should seek their own professional taxation advice.

A traditional security is, broadly, a security that is not

issued at a discount of more than 1.5 per cent, does

not bear deferred interest or is not capital indexed.

A traditional security may be, for example, a bond, a

debenture, a deposit with a financial institution or a

secured or unsecured loan. Shares and units in unit

trusts are not traditional securities.

If an Australian resident disposes of or transfers their

traditional securities and the proceeds from their

disposal exceed their cost, the resulting gain will

generally be assessable income in the financial year

in which the disposal or redemption takes place. This

gain will be taxed as ordinary income and will not be

a capital gain. Consequently, the Australian resident

may not be entitled to apply the capital gains discount

in respect of the gain and may not be entitled to apply

any capital losses against the gain.

Conversely, if the proceeds of disposal are less than

the cost of the traditional securities, the resulting loss

may be an allowable deductible in the financial year in

which the disposal or redemption takes place.

Traditional securities information

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