CGT ON 'NOTIONAL' GAIN GIA FOR TAX RETURN

mildew50

Hi 
I have a GIA and I am now filling out my tax return. The statement from my GIA provider includes a consolidated tax certificate which shows the dividends that have been earned on the funds in the GIA and on which I know that I will pay income tax. The dividends themselves are now just part of the GIA. Separately the statement from the GIA includes a Capital Gains report showing gains and losses for the year.  I haven't done anything with the funds in the GIA over the year so are these gains and losses 'notional' i.e the increase or decrease in value of the various investments over the year or have the gains or losses arisen where my provider may have switched investments over the year?
Do I pay CGT on the net gains shown on the report (less any annual CGT allowance) even though the funds are still in the GIA and nothing has been 'extracted' from the GIA by me over the year?
I am paying the GIA provider annual fees - can I deduct these from my capital gain or income to reduce my tax?
Hope that all makes sense

Keep_pedalling

No these are paper gains, you will only have a CGT liability if you actually sell any of these assets 

HappyHarry

Has the provider switched investments that you hold? If so, then yes, the CGT will be payable. It does not matter whether you have withdrawn monies from the GIA or not.

It would be unusual for a provider to send a “notional” CGT statement. 

 No, you cannot offset your fees against your capital gain.

DRS1

Are you sure the Capital Gains statement isn't just an investment report?

mildew50

Thank you all for your comments
The statement from the provider is called "Capital Gains Tax Report" - so I think that maybe the provider has switched investments which means presumably that we have effectively sold some investments in the GIA and bought some other investments in the GIA so regardless of the fact that I have not extracted those gains, they are actual gains rather than paper gains so CGT is payable?
Noted re no right to deduct provider fees to reduce our gain

DRS1

So a third party can buy and sell your shares without you having a say in the matter?

Is that discretionary portfolio management?

Is that a good idea?

mildew50

yes it is a discretionary managed portfolio GIA so the provider (it is a financial advisory firm) manage the GIA.
I am hoping its a good idea!

HappyHarry

mildew50 said:

Thank you all for your comments
The statement from the provider is called "Capital Gains Tax Report" - so I think that maybe the provider has switched investments which means presumably that we have effectively sold some investments in the GIA and bought some other investments in the GIA so regardless of the fact that I have not extracted those gains, they are actual gains rather than paper gains so CGT is payable?
Noted re no right to deduct provider fees to reduce our gain

Yes, as the investments are not in a tax-protected wrapper CGT becomes liable on disposal of each asset within the GIA.

[Deleted User]

DRS1 said:

So a third party can buy and sell your shares without you having a say in the matter?

Is that discretionary portfolio management?

Is that a good idea?

Very common - hopefully the increase in the value of the portfolio as a result of these decisions covers their fees!

eskbanker

mildew50 said:

yes it is a discretionary managed portfolio GIA so the provider (it is a financial advisory firm) manage the GIA.
I am hoping its a good idea!

If you're paying a company to manage your investments and don't understand the documentation they've sent, then you should be able to seek clarification from them rather than having to ask anonymous online strangers?

Dazed_and_C0nfused

[Deleted User] said:

DRS1 said:

So a third party can buy and sell your shares without you having a say in the matter?

Is that discretionary portfolio management?

Is that a good idea?

Very common - hopefully the increase in the value of the portfolio as a result of these decisions covers their fees!

But it sounds awfully like the portfolio manager can, in theory at least, create Capital Gains liability which the op doesn't necessarily have the cash funds to pay?