taxation on equity investments for mutuals

I'm a bit unclear about the notes on the taxation of mutuals in respect of equity investments.

It says that realised gains on equities are taxed (subject to indexation allowances etc), but it doesn't seem to mention (a) unrealised gains on equities, or (b) dividend income from equities.

I'm guessing that's because neither of these items are taxed for a mutual. Is that right, or did I miss something?

I'd appreciate it if somebody could clarify this for me.

 

Hi Matt,

Yes, you're right.

Dividend income is aready taxed (franked), just as for proprietary insurers.

Gains are only taxed when they are realised.

Coralie

 

For a prop gi am I right in thinking only unrealised gains are taxed (on a fair value basis) ? Div income franked at source and no tax on realised gains?

 

Hi Leela,

For loan relationships (gilts, bonds etc), the whole of the investment return is taxed. This means both the income and the gains, whether realised or not.

For equities, the gains are taxed as income. Unrealised gains are brought into the accounts as they accrue, so these are taxed too. The dividends are not taxed as they are already franked.

See Chapter 3 Section 2 for more detail.

Coralie