We are not licensed to provide tax advice, and tax outcomes will vary depending on your personal tax situation. You should consult your tax adviser.
Taxation on income
Investments in your Vanguard Personal Investor Account can derive income, such as distributions from managed funds and ETFs and dividends from shares. As you remain the beneficial owner of the investments in your account, the income tax consequences of investing should generally be the same as if you held the investments directly.
Generally, income received from investments in managed funds and ETFs held by you in your Vanguard Personal Investor Account will form part of your assessable income, including any franking credits and/or foreign income tax offsets. This is the case regardless whether the money is actually paid to your Vanguard Cash Account or reinvested.
Franking credits
Your income derived from investments may include franking credits attached to franked dividends in respect of Australian shares. Subject to relevant qualification requirements (including a 45-day holding period) these franking credits will need to be included in your taxable income and, depending on your particular circumstances, may be available to offset your tax liability. You may also be entitled to a refund if the franking credits exceed your total income tax liability.
Foreign income
Income received from sources outside Australia may be subject to tax in the country of source. Australian tax resident investors may be entitled to claim a foreign income tax offset against their Australian tax liability in respect of this tax.