Q: Is it advisable to buy an ETF so late in the year
I remember?? reading an article regarding taxation on distributions, namely that you are taxed on the total years distributions, even though you have not received the entire years distribution if u purchase late in the year
Appreciate any clarification you can offer on this
Or should I wait till January 2025 to purchase?
Thank you again
I remember?? reading an article regarding taxation on distributions, namely that you are taxed on the total years distributions, even though you have not received the entire years distribution if u purchase late in the year
Appreciate any clarification you can offer on this
Or should I wait till January 2025 to purchase?
Thank you again
5i Research Answer:
There are two issues here. One is cash distributions. Many funds pay out an extra payment at year end, reflecting capital gains. This is taxable, but unit holders do get cash. The other issue is phantom distributions, where funds declare a distribution but do not actually pay out the cash. This is still taxable and investors need to pay cash taxes even though no taxes were received. For this reason, it is (generally) advisable not to buy too many mutual funds in the last month of the year.