⚠️ Important Note
This guide is general in nature and not tax advice. Always refer to your fund’s official distribution and annual tax statements, or speak to a qualified tax professional before making adjustments.
Overview
Some income-focused ETFs — like YMAX, ULTY, and MSTY — include a Return of Capital (ROC) portion in their distributions.
A ROC isn’t taxable income — it’s when part of your original investment is returned to you, which reduces your cost base in the ETF.
This is common in covered-call or yield-enhanced ETFs, where part of the payout comes from option premiums or capital reserves, not just dividends.
Navexa automatically records ETF distributions in your Income tab (via your broker or registry).
However, when a payout includes a ROC, you’ll need to edit the prefilled dividend and add a separate ROC trade so your income and cost base remain accurate.
Step 1. Edit the Prefilled Dividend
Open your ETF holding in Navexa.
Go to the Income tab — you’ll see the prefilled distribution entry.
Click Edit.
Leave the Ex Dividend Date and Paid Date as-is (these come from your data feed).
Update the Trust Income fields to reflect only the taxable portion of the payout.
Click Update Dividend to save your changes.
💡 Tip: Use the ETF’s official distribution or tax statement to confirm the breakdown between taxable income and ROC.
Step 2. Add the Return of Capital (ROC) Portion
Go to the Trades tab.
Click +Add
Choose Return of Capital as the trade type.
Use the same payment date as the distribution.
Enter the ROC amount (the non-taxable portion).
Click Save.
This entry reduces your cost base per unit but does not appear as income.
Step 3. Verify Your Reports
After saving both entries:
The Taxable Income Report shows only the income portion.
The Capital Gains Report reflects the reduced cost base.
Your Performance data remains accurate.
🧮 Real-World Example: YMAX (October 2025 Distribution)
Let’s walk through a real example together.
You hold 1,000 units of YMAX (ASX:YMAX).
The official YieldMax ETF distribution table for October 2025 shows:
Detail | Value |
Distribution per share | $0.1743 |
Return of Capital (ROC) | 60.55% |
Taxable income portion | 39.45% |
Paid date | 16/10/2025 |
Step 1. Calculate the Split
Total distribution:
1,000 × $0.1743 = $174.30
Taxable portion (39.45%)
$174.30 × 0.3945 = $68.74
Return of Capital portion (60.55%)
$174.30 × 0.6055 = $105.56
✅ Total check: $68.74 + $105.56 = $174.30
Step 2. Edit the Prefilled Dividend
Open your YMAX Income tab, find the dividend with Paid Date 16/10/2025, and click Edit.
Update as follows:
Field | Value |
Trust Income: | Yes 1️⃣ |
Ex Dividend Date: | 15/10/2025 2️⃣ |
Paid Date: | 16/10/2025 3️⃣ |
Franked Amount: | 0 4️⃣ |
Franking Credits: | 0 5️⃣ |
Unfranked Amount: | 68.74 6️⃣ |
Notes: | “Taxable portion = 39.45% ($0.06874 per share)” 7️⃣ |
It should look like this:
Then click Update Dividend 8️⃣.
Step 3. Add the Return of Capital Trade
Next, record the ROC portion as a separate trade.
Field | Value |
Trade Type: | Return of Capital 1️⃣ |
Date: | 16/10/2025 2️⃣ |
Amount: | 105.56 3️⃣ |
Notes: | “60.55% ROC from YMAX 16 Oct 2025 distribution ($0.10556 per share)” 4️⃣ |
It should look like this:
Click Add Trade.
After saving, you’ll see your Return of Capital shown as a negative amount in the Trades list — for example:
This is intentional — it means that capital has been returned to you and your cost base reduced accordingly.
Step 4. Confirm Your Reports
After both updates:
Taxable Income Report → shows $68.74 income.
Capital Gains Report → cost base reduced by $105.56.
Performance view → unchanged overall.
Why ETFs Include Return of Capital
ETFs like YMAX or ULTY often use covered call or income enhancement strategies.
They sometimes distribute option premium or capital as part of the income stream.
That’s classified as Return of Capital, not taxable income — but it reduces your cost base, meaning a potentially larger capital gain when you sell later.
Summary
Component | Where to Record | Effect in Navexa |
Taxable Income | Edit the prefilled dividend (Income tab) | Appears in Taxable Income Report |
Return of Capital | Add a Return of Capital trade (Trades tab) | Reduces cost base, not income |