Tax scopes

Overview

A tax scope corresponds either to either a single account or to a group of accounts, which are taxed in the same way. For example, you may have multiple General Investment Accounts (GIA) for which capital gains and incomes are taxable.

Many countries also provide accounts in which investments are either not taxed or where a lower rate of tax applies. For example the United Kingdom has ISA accounts (Individual Savings Accounts) in which investments are not subject to taxes on incomes or capital gains. In this case you would create a tax scope name “ISA” and all your ISA accounts would belong to this tax scope.

Also assets held in accounts for retirement savings are often taxed differently than assets held in General Investment Accounts to encourage people to save and invest for their retirement. If you own such accounts you may need to create a tax scope for these.

In general capital gains or losses must be calculated by taking into account the transactions made in all of taxable accounts. Hence the scope for calculating tax can be greater than just a single account. This is particularly important for capital gains to be accurate when you hold the same asset in multiple taxable accounts.

Examples

Here is how the demo tax scopes are defined in the example files.

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| ID   | Taxable | Description                             |
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| GIA  | true    | Taxable General Investment Accounts     |
| ISA  | false   | Tax-Free Stocks and Share ISA           |
| SIPP | false   | Tax-Free Self Invested Personal Pension |
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Taxable

The Taxable columns must contain either true if assets held in this tax scope are taxable or false otherwise. The program will exclude the figures from the accounts corresponding to non-taxable tax scopes in the annual calculations of income received and realised capital gains, so the total figure represent the taxable amounts.