A guide to reporting investment income

Don’t overlook the importance of reporting all investment income in your tax return!

If you’ve engaged in significant investments, it’s crucial to include any income generated from those investments in your tax return. This includes income from interest, dividends, rental income, managed investment trust credits, crypto assets, and capital gains. Whether the income is received directly or through partnerships or trusts, it must be declared.

In cases where assets earning investment income are jointly held, the assumption is that the income is equally divided, unless there is evidence supporting unequal ownership proportions.

This financial year, make sure to declare six specific items as income in your tax return, including:

1. Interest income

  • Interest earned from financial institution accounts, term deposits, and other sources.
  • Interest received from children’s savings accounts if you opened or operated the account on behalf of a child.
  • Interest paid or credited to you, such as interest on early payments or delayed refunds.
  • Life insurance bonuses, which may entitle you to a tax offset.

2. Dividends

  • Dividend income from listed investment companies, public trading trusts, corporate unit trusts, or corporate limited partnerships.
  • Franked dividends that include imputations or franking credits, which must be declared along with the franking tax offset.

3. Rental property income

  • Full amount (gross) of rent and rent-related payments received, including from overseas properties.
  • Monetary value of goods and services received instead of rent.

4. Managed investment trusts

Income or credits received from trust investment products such as cash management trusts, mortgage trusts, unit trusts, and managed funds.

5. Crypto asset income

  • Rewards received for staking crypto assets, which should be calculated, converted into Australian dollars, and reported as “other income” in the tax return.
  • Income from crypto received via airdrops, converted into Australian dollars and declared as “other income.”

6. Capital gains

  • Capital gains realised from the sale or disposal of capital assets, including investment properties, shares, or crypto assets.
  • Calculation of the difference between your asset’s cost base (what you paid) and the capital proceeds (the amount you received).
  • When reporting your tax return, it is important to include any capital gains and capital losses you have incurred. By doing so, you can take advantage of offsetting allowable capital losses against your capital gains to calculate your net capital gain or loss. If you have a net capital loss, you can retain the loss to offset capital gains in future years.

To ensure a smooth tax return process, especially when it comes to investment-related income, consider consulting with our KMT tax adviser. We can provide guidance relevant to your circumstances to avoid compliance issues or incorrect reporting.

Start your tax journey with us today to simplify the process and avoid any complications with your tax return this financial year.

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This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.