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Renewal commission

An investor receives introductory and renewal commission for making fund investments and some of the renewal commission is in the form of additional units

My client invests in unit trusts/open-ended investment companies (OEICs) through an investment manager. The manager charges a fee and if the manager receives commission from the unit trust this is paid to my client.

My understanding of SP 4/97 is that this is not taxable income nor does it affect the capital gains tax computation. Although rebated commissions on OEICs are not specifically mentioned the logic of the section on CGT is that a cashback is entirely separate from the transaction which created it so there is no reason to net it off against the cost of the investment. It is just a ‘windfall’.

What if the client receives renewal commission as well as introductory commission?

The fund manager pays this to the investment manager every year as long as the client keeps units in the fund and the investment manager remits it to the...

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