Gold Etf Funds Taxation

A gold etf is a commodity exchange traded fund that can be used to hedge gold commodity risk or gain exposure to the fluctuations of gold itself.

Gold etf funds taxation.

For taxation purposes gold exchange traded funds are considered to be non equity investments. The price of gold increased by 39 2 in the past year significantly exceeding the. Without a doubt gold etfs are the most coveted in the commodity fund space. So if you have sold gold etfs at a profit and that too after three years the long term capital gains tax of 20 per cent with indexation becomes applicable.

Hence taxation rules similar to debt funds apply to such investments. However many investors forget exactly how each product is taxed and what is expected of them come tax season. If you trade or invest in gold silver or platinum bullion the taxman considers it a collectible for tax purposes. Paper gold another way of buying gold is by investing in gold mutual funds gold exchange traded funds etfs and or sovereign gold bonds sgbs.

The same applies to etfs that trade or hold gold silver or platinum. The latter is considered to be much less hassle. You will receive a gold schedule k 1 for tax purposes from the etf entity. The annualized after tax return on the gold coins is the lowest about a percentage point lower than the gold mutual fund which receives ltcg treatment.

As a brief reminder every etf that invests in commodity futures will issue a k 1 while an etn utilizes a 1099. For taxation purposes gold etf and international etfs are taxed as non equity funds. Gold etfs attract a short term capital. Short terms gains made on etf units held for a period of less than 36 months are taxed as per the applicable.

If an investor has increased risk on his portfolio assets when the price of gold rises owning a gold etf can help reduce risk in that position. The example assumes that the costs and fees for buying owning and selling gold coins gold mutual funds and gold futures etfs are the same.