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Excess Reportable Income Vanguard for 2018-2019

Index tracking funds and ETFs
Alaric
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Re: Excess Reportable Income Vanguard for 2018-2019

#216811

Postby Alaric » April 23rd, 2019, 12:55 pm

scrumpyjack wrote:Excess reportable income would certainly be an addition to cost no matter how long ago it arose since acquisition. It is income deemed to have been distributed to you and then reinvested by you back into your holding.


That's the same as when you hold accumulation units of an OEIC. The difference is that you get an official statement from the OEIC or your Broker/platform telling you the amount. It was still a pain remembering to add it to taxable income and book cost.

KenW
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Re: Excess Reportable Income Vanguard for 2018-2019

#273849

Postby KenW » December 29th, 2019, 1:41 pm

I've just been made aware of ERI by my accountant and am looking into whether it applies to me (I only hold a few US-registered Vanguard ETFs to cover my whole portfolio). Two may be liable - VYM and VXUS. The KPMG tool is good but the data seems to be historic not current for Tax Year 2018/19 whereas the links to offshore funds that I get seem to relate only to Vanguard's Ireland registered funds not the US ones.

Can someone tell me in which Vanguard ETF document I can find the ERI or point to a link that has current US-registered ETF ERI?

Thanks.

genou
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Re: Excess Reportable Income Vanguard for 2018-2019

#273864

Postby genou » December 29th, 2019, 3:44 pm

KenW wrote:The KPMG tool is good but the data seems to be historic not current for Tax Year 2018/19


VYM and VXUS both have a year-end of 31 Oct. ERI is deemed to be received 6 months after the year-end, so for FY19, that would be the ERI arising in the year to 31/10/2018, and deemed to be received on 30/4/2019. Are those numbers available?

KenW
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Re: Excess Reportable Income Vanguard for 2018-2019

#274537

Postby KenW » January 2nd, 2020, 8:46 am

Thanks genou. If you link to the KPMG reporting funds tool and enter the CUSIP for the Vanguard VYM ETF, you will get a ERI of $0.0912 per share for 2017 (the latest year they have data). Where is that ERI reported in the Vanguard fund documents? As a US fund I don't think it will be called ERI but something like 'profits over distributions' or something? I contacted KPMG and all they seem to do is send out a reminder to the reporting fund managers and wait to see what they get back. It would be really helpful to be able to look it up myself but I'm finding it hard to find the number in the plethora of fund documents.

scrumpyjack
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Re: Excess Reportable Income Vanguard for 2018-2019

#274540

Postby scrumpyjack » January 2nd, 2020, 9:29 am

Vanguard publish ERI information themselves

This may have what you are looking for

https://www.vanguardinvestor.co.uk/cont ... s-2018.pdf

KenW
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Re: Excess Reportable Income Vanguard for 2018-2019

#274742

Postby KenW » January 3rd, 2020, 7:16 am

Thanks scrumpyjack. If only it were that easy. These are the Ireland-based offshore funds (ISIN= IExxxxxxxxxx). I want the latest ERI for Vanguard's US-based reporting funds (ISIN= USxxxxxxxxx).

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Re: Excess Reportable Income Vanguard for 2018-2019

#274762

Postby scrumpyjack » January 3rd, 2020, 9:12 am

KenW wrote:Thanks scrumpyjack. If only it were that easy. These are the Ireland-based offshore funds (ISIN= IExxxxxxxxxx). I want the latest ERI for Vanguard's US-based reporting funds (ISIN= USxxxxxxxxx).


Ah, sorry for that.

You no doubt know the severe disadvantages to a UK investor of having funds that do not have UK Reporting Status, eg realised gains taxed as income not capital? Don't know if Vanguards US funds have such status.

hiriskpaul
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Re: Excess Reportable Income Vanguard for 2018-2019

#274978

Postby hiriskpaul » January 3rd, 2020, 6:30 pm

All Vanguard US listed ETFs have reporting status, so no concerns over that at present.

I always check with KPMG, but they always come back with zero ERI for the US listed ETFs I hold outside tax shelters. I think this is because it may be a legal requirement in the US for an ETF to distribute all received dividends.

Edit: just looked up VYM (CUSIP 921946406) and it does report $0.0555 ERI for 2019! Guess I have just been lucky up to now.

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Re: Excess Reportable Income Vanguard for 2018-2019

#274981

Postby Lootman » January 3rd, 2020, 6:41 pm

hiriskpaul wrote:All Vanguard US listed ETFs have reporting status, so no concerns over that at present.

I always check with KPMG, but they always come back with zero ERI for the US listed ETFs I hold outside tax shelters. I think this is because it may be a legal requirement in the US for an ETF to distribute all received dividends.

Edit: just looked up VYM (CUSIP 921946406) and it does report non-zero ERI for 2019! Guess I have just been lucky up to now.

Correct. Not only that but US funds are mandated to distribute not just 100% of received dividends, but also 100% of received realised capital gains. That can be a reason to avoid US-listed funds n taxable UK accounts.

So in a sense US funds over-distribute relative to UK ones.

Due to their structure most ETFs do not generate realized gains anyway, so that part is moot. But it's good that Vanguard took the extra step of getting certified as distributing.

hiriskpaul
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Re: Excess Reportable Income Vanguard for 2018-2019

#274985

Postby hiriskpaul » January 3rd, 2020, 6:51 pm

Lootman wrote:
hiriskpaul wrote:All Vanguard US listed ETFs have reporting status, so no concerns over that at present.

I always check with KPMG, but they always come back with zero ERI for the US listed ETFs I hold outside tax shelters. I think this is because it may be a legal requirement in the US for an ETF to distribute all received dividends.

Edit: just looked up VYM (CUSIP 921946406) and it does report non-zero ERI for 2019! Guess I have just been lucky up to now.

Correct. Not only that but US funds are mandated to distribute not just 100% of received dividends, but also 100% of received realised capital gains. That can be a reason to avoid US-listed funds n taxable UK accounts.

So in a sense US funds over-distribute relative to UK ones.

Due to their structure most ETFs do not generate realized gains anyway, so that part is moot. But it's good that Vanguard took the extra step of getting certified as distributing.

Looks like my luck has run out! VTI has non-zero ERI for this year. My other ETF (VB) still zero for this tax year.

ps I hold VNQ, a REITs ETF, and that distributes a fair amount of capital gains. Fortunately I hold in my SIPP.

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Re: Excess Reportable Income Vanguard for 2018-2019

#274988

Postby Lootman » January 3rd, 2020, 6:56 pm

hiriskpaul wrote:
Lootman wrote:
hiriskpaul wrote:All Vanguard US listed ETFs have reporting status, so no concerns over that at present.

I always check with KPMG, but they always come back with zero ERI for the US listed ETFs I hold outside tax shelters. I think this is because it may be a legal requirement in the US for an ETF to distribute all received dividends.

Edit: just looked up VYM (CUSIP 921946406) and it does report non-zero ERI for 2019! Guess I have just been lucky up to now.

Correct. Not only that but US funds are mandated to distribute not just 100% of received dividends, but also 100% of received realised capital gains. That can be a reason to avoid US-listed funds n taxable UK accounts.

So in a sense US funds over-distribute relative to UK ones.

Due to their structure most ETFs do not generate realized gains anyway, so that part is moot. But it's good that Vanguard took the extra step of getting certified as distributing.

Looks like my luck has run out! VTI has non-zero ERI for this year. My other ETF (VB) still zero for this tax year.

I wonder if it has to do with the US tax year being different? They have to distribute within their tax year, which is why US funds invariably make a distribution in December - their tax year is the calendar year.

But they would not feel any obligation to make distributions to coincide with the tax years of other nations.

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Re: Excess Reportable Income Vanguard for 2018-2019

#274995

Postby hiriskpaul » January 3rd, 2020, 7:52 pm

Lootman wrote:
hiriskpaul wrote:
Lootman wrote:Correct. Not only that but US funds are mandated to distribute not just 100% of received dividends, but also 100% of received realised capital gains. That can be a reason to avoid US-listed funds n taxable UK accounts.

So in a sense US funds over-distribute relative to UK ones.

Due to their structure most ETFs do not generate realized gains anyway, so that part is moot. But it's good that Vanguard took the extra step of getting certified as distributing.

Looks like my luck has run out! VTI has non-zero ERI for this year. My other ETF (VB) still zero for this tax year.

I wonder if it has to do with the US tax year being different? They have to distribute within their tax year, which is why US funds invariably make a distribution in December - their tax year is the calendar year.

But they would not feel any obligation to make distributions to coincide with the tax years of other nations.

I am not sure what is going on. The reporting period for the fund (VTI) is the same as that in the annual accounts, so no mis-alignment there. A few curious things in the accounts though. Firstly, the fund does make a "Realized Net Gain" which is about half of "Net Investment Income", but no "Realized Capital Gain" was distributed and virtually all of "Net Investment Income" is distributed. I assume their must be something in the arcane accounting rules to permit this. Secondly, for some reason, the amount of income per share not distributed was much larger for year ending 2018 than for previous years (2018 $0.176, 2017 $0.018, 2016 $0.001, 2015 $0.015, 2014 $0.005). The ERI for 2018, according to KPMG is $0.1324. It will be very interesting to see what happens to the undistributed income in the 2019 accounts. I will be a bit miffed if it gets distributed as I will then be taxed twice! That does not happen with Irish domiciled ETFs though, so hopefully will not arise.

I can see I will have an extra complication for this year's tax return - how to handle this ERI as I have not experienced it before for a US listed ETF. When I receive dividends, 15% withholding tax has already been deducted and is used as a tax credit to offset UK income tax on those dividends. So how should I report the ERI? Does that include or exclude 15% ERI?


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