Taxation question on Rabo investments

[Dave Vanian]

For some time I have been contributing occasional random amounts into four different Rabo funds. A new investment opportunity has arisen and I'm going to be cashing them in earlier than originally anticipated.

At present, all four funds are showing a nominal loss due to current market conditions, which I have no problem with. I intend waiting until the total value recovers to the amount I have invested, at which point I will cash in. I've no idea how long this will take, but I'm in no rush and am confident that they will eventually recover.

My question is - will I have any liability to tax? If my total investment is cashed in at a break-even point,I would have thought not. But then, at that time I presume some of the four funds will be showing a profit and some showing a loss. Does this affect the computations?

Thanks.

 

[Sunny]

Yes, you can't offset profits in one fund against a loss in another. You have a tax liability for any fund that you make a profit on

 

[Dave Vanian]

Thanks. That's useful to know even if it's not the answer I wanted to hear.

That, therefore puts Rabo funds at a distinct disadvantage when compared with life assurance company funds in the Exit Tax regime. If you buy, a Life Co investment policy (on execution-only terms of course so you avoid any hefty charges) and split your investment over several funds, exit tax is only calculated on the overall value of your Life Co investment so if some of your fund choices go down and others go up, one will offset the tax on the other. With Rabo it seems you will get penalised if any of your fund choices go up.

That's aside from the self-declaration of tax on Rabo funds, compared with deduction of Exit Tax at source, which I think has been discussed here before.