The ATO is preparing to enter into the second phase of its dividend washing compliance program.

Over 3000 individuals and entities have now received written correspondence requesting that they amend their returns to rectify dividend washing benefits.

Taxpayers who have gained a tax benefit from dividend washing transactions are being asked to self amend their tax-returns for the 2011, 2012, 2013 and 2014 financial years. There will be no penalties for taxpayers who comply with this direction.

Dividend washing occurs when a shareholder sells and then immediately repurchases an identical bundle of shares, and in the process claims two sets of franking credits when in substance they have only held one set of shares.

When the shares are first sold the holder retains the franking credit. This is known as selling shares ex-dividend. The investor then repurchases an identical set of shares cum-dividend (with the franking credits), thereby receiving two sets of franking credits.

Dividend washing transactions occur on the ASX trading market, where shares can be sold without dividends. Taxpayers who have engaged in dividend washing are unable to claim the tax offset gained from the second set of shares. The ATO will continue to monitor dividend transactions and apply the divided integrity rule to prevent future divided washing.

Call (02) 4926 2300 or email us.

To discuss dividend washing further or if you have any questions, please do not hesitate to contact our expert team here at Leenane Templeton.

The post ATO cracking down on dividend washing appeared first on Newcastle Financial Planners & Financial Advisors.

The prevailing investment environment underlines the value of ensuring that an investment portfolio is appropriately diversified in accordance with your personal circumstances – including your risk tolerance, your present and future needs and the investment timeframe.

Other investment basics for an investor to consider at all times, irrespective of what the markets are doing include:

• Regularly review your long-term asset allocation investment strategy and rebalance your portfolio to ensure it fits with your asset allocation
• Review your investment costs and research alternatives to ensure your costs are kept to a minimum.  There is no need to pay for services that you don't use.
• Know the companies in which you invest.  Don't have so many stocks that you can't keep up with what is happening in the companies.
• Remember that a dividend is the company paying you for the use of your money.
• Remember that a little and often does work.  In investment terms this is called dollar-cost-averaging when you invest amounts at regular intervals so as to even out the costs of the stock.  By buying regularly you can buy more stocks when the price is lower and less stocks when the price is high, so you average out the price and reduce the risk of investing large amounts before a price fall, and also reduce the risk of making an investment which is emotionally driven.  Align this with a review in investment costs to ensure you have an optimal scenario.

What do successful long-term investors say?

• Patience is your friend
• When buying shares, think like a prospective owner of a business
• When making a stock market investment, if you don't plan on holding it for 10 years then don't waste more than 10 minutes considering it
• You don't need a lot if good investments, you need a few outstanding ones
• Keep investment costs to a minimum. This is one of the factors over which investors have much control.
• Practise dollar-cost-averaging. This involves investing regular amounts in the sharemarket at regular intervals.  In this way, you buy more stocks when prices are lower and fewer stocks when prices are higher. You average your buying costs and reduce the risk of investing a large amount shortly before a fall in share prices.

Are you an investor?

Speak with one of our Newcastle financial planners and investment experts today to help with your investments and self managed super funds

The post Being a Cool Investor appeared first on Newcastle Financial Planners & Financial Advisors.