Capital Return

What is a capital return? 

A capital return refers to the amount of money an investment generates over time, usually expressed as a percentage of the initial investment. It can represent a profit or loss made on the original amount of money invested. 

How is capital return different from a dividend? 

The difference between capital return and dividends boils down to the source of the money. Capital return reflects the profit or loss from the change in the value of your investment, like stocks or real estate, when you sell it. On the flip side, dividends are a share of a company's profits that they distribute to shareholders as a reward for holding their stock. While both can provide value in terms of portfolio growth, capital return is tied to the asset's value while dividends are a periodic payout from a company's earnings. 

Is capital return taxable in Australia? 

For profit made on assets such as investments in properties and stocks, a capital gains tax will likely be imposed. However, these taxes are only realised upon the sale of the asset if a profit was made. In the instance of a capital loss, you may be able to carry them forward as deductions in following financial year.