Do you have investments in investment funds? Stay tuned for changes in Income Tax 2022 when reporting these investments. The Federal Revenue made changes to the “Goods and Rights” form, with the creation of “groups” and new “codes”.
As a result, investment funds gained their own group and several codes where they were inserted were changed. The problem is that most banks and brokers have not released the income report with the new codes, which can create confusion for the taxpayer when filling out the declaration.
See in this article what has changed compared to last year, with a “conversion table” of the old and new codes, as well as explanations on how to declare the balances and income of these applications.
Get the earnings report from the bank or broker
The first step to declare investments in IR 2022 is to get the financial income report from the bank or brokerage where you keep the applications. This document contains all the information about your investments. Without it, it is not possible to complete the declaration.
Usually, the report is available on the bank’s or broker’s website or application for you to download on your computer or cell phone. If you have trouble finding the document, ask your manager or your institution’s customer service for help.
If you have an account with more than one bank or have invested in more than one brokerage firm, you will need to get reports from all these financial institutions.
Don’t Forget Dependent Investments
Also get income statements from investments made by your dependents and your spouse, in case the two of you are filing together.
Understand the data in the earnings report
There is no standard financial income reporting template. Basically, the document is divided into three parts, which correspond to the declaration sheets where the information must be inserted:
Exempt incomeIncome subject to exclusive taxationAssets and rights
If you are not sure which form to put your investment income on, follow exactly what is in the bank or brokerage report.
Investments always appear in the report separated into “exempt income” and “income subject to exclusive taxation”, as in the image below.
How to declare the income of most funds
The vast majority of investment funds are taxed directly at source. That is, the bank or broker deducts the Income Tax at the time of withdrawal or every six months, through the so-called come-quotas.
For this reason, the income from these investments must be declared in the “Income Subject to Exclusive/Definitive Taxation” form of the Income Tax return.
Only funds that are tax-exempt, such as real estate and incentivized debentures, must have their income declared in another form of the declaration, of “Exempt Income”, as will be explained further below.
If you are in any doubt as to whether the fund you invest in is subject to exclusive taxation or is exempt, please follow the information exactly as it appears in the report provided by your bank or brokerage firm.
When declaring income, there is no need to separate them by fund. Just enter the total income subject to exclusive taxation that you have at the same bank or brokerage.
Locate the “Income Subject to Exclusive/Definitive Taxation” tab in the menu on the left side of the 2022 Income Tax filling program screen.
Click “New”. Then, choose the “Type of Income” by the code “06 – Income from financial investments”.
Indicate who made the investment, whether you or your dependent. If you both have investments, open a card for each.
Inform the name and CNPJ of the paying source, which is the bank or brokerage company where you made the application. If you have applications in more than one bank or brokerage, open a file for each institution.
In the “Value” field, enter the total net income (already deducted from income tax), exactly as stated in the report presented by the bank.
Pay attention if the expression “net income” appears in the report. Some institutions report two values, the “gross income” and the “withheld tax”. In that case, you need to do the math (gross income minus withholding tax) to find out the net income.
How to report income from funds that are exempt
Some types of investment funds, such as real estate and incentivized debenture funds, have income that is exempt from income tax.
To declare the income from these funds, locate the “Exempt and Non-Taxable Income” form in the menu on the left side of the IR 2022 filling program screen.
Click “New”. Under “Income Type” select the code “26 – others”.
Then indicate who made the investment, whether you or a dependent. Inform the name and CNPJ of the paying source, which is the bank or brokerage company where you made the investment.
In the “Description” field, inform that this is exempt income from an investment fund and detail which fund it is.
In the “value” field, enter the exempt income received in 2021. In the bank or brokerage report, this value appears in the “Income” column.
It is not necessary to report the income of each fund separately. Simply inform the total amount of exempt income received at the same bank or brokerage. Normally, the total amount appears on the last line of the report.
To finish filling in the form, click on “OK”.
If you have applications in more than one bank, open a form for each institution and repeat the entire procedure described above.
The same goes for investments on behalf of dependents. Open a card for each person and each bank.
See what has changed for the funds in the “Assets and Rights” sheet
Unlike the two previous forms, where it was sufficient to inform the total income that was exempt or taxed at source, in the “Assets and Rights” form you will have to detail the investments one by one, in addition to informing the balances on 12/31/2020 and in 12/31/2021.
The Federal Revenue made changes to the “Goods and Rights” form this year, with the creation of “groups” and new “codes”. As a result, investment funds gained their own group and several codes where they were inserted were changed.
The problem is that most banks and brokers have not released the income report with the new codes, which can create confusion for the taxpayer when filling out the declaration.
If you have already done the Income Tax last year and managed to import the 2021 declaration into the IR 2022 program, your investment information will automatically appear on this form.
It is important to check that the funds appear with the correct “group” and “code”, as will be explained below.
If you have not made a declaration in the last year or were unable to import the declaration file, follow the steps below. These guidelines also apply to those who made new investments in 2021.
Open the “Assets and Rights” tab and click on “New”.
As of this year’s declaration, investment funds must be declared in “group 07 – funds”.
The choice of “code” depends on the characteristics of the fund. The Federal Revenue expanded the list of codes, which was already extensive.
See what the new codes are. Next, you will see how to relate the old codes with the new ones.
01 – Investment funds subject to periodic taxation (come-quotas) 02 – Investment funds in agro-industrial production chains (Fiagro) 03 – Real estate investment funds (FII) 04 – Equity investment funds and privatization mutual funds – FGTS05 – Equity investment funds – access market06 – Equity investment funds, investment funds in shares of equity investment funds and investment funds in emerging companies07 – Equity investment funds in infrastructure (FIP-IE) and Investment funds in participation in intensive economic production in research, development and innovation (FIP-PD&I)08 – Fixed income index funds – Law 13.043/1409 – Other market index funds (ETFs)10 – Credit rights investment funds (FIDCs) )11 – Investment funds without periodic taxation99 – Other funds
How to relate the old codes with the new ones
As you’ve already noticed, there have been several changes to the list of codes used by the IRS to report funds on the “Assets and Rights” sheet.
The following is a “conversion table” to facilitate the updating of the form, if you have already declared funds last year or the income report provided by the bank has the old codes without them.
Use the new code “01 – Investment funds subject to periodic taxation (come-quotas)” to update the old codes of the following funds:
71 – Short-term funds (CP). Some fixed income funds are classified in this way.72 – Long-term (LP) funds. Most fixed income funds (DI or FIRF) and multimarket funds (FIM) fall under this code. Do not include FIDC in this new code.
Use the new code “03 – Fundos de Investimento Imobiliário (FII)” to update the old code of these funds:
73 – Real estate investment funds (FII).
Use the new code “04 – Equity investment funds and privatization mutual funds – FGTS” to update the old stock fund code:
74 – Equity funds (FIA). Do not include equity funds (FIP) and market index funds (ETF) in this new code.
Use the new code “09 – Other market index funds (ETFs)” to update the old code (74) for these funds.
Use the new code “10 – Credit Rights Investment Funds (FIDCs)” to update the old code (72) of these funds.
Use the new code “99 – Other funds” to list funds that did not have a specific code, such as incentivized debentures, which were listed with the old code “79 – Other funds”.
Fill in the form with the fund’s data
After filling in the “group” and the “code” corresponding to the fund, inform the “CNPJ” of the investment fund. This information must be included in the earnings report provided by the bank or brokerage firm.
Be careful here because this number is different from the CNPJ of the paying source, which is the bank or brokerage company where you made the application. Investment funds have their own CNPJ, as in this example of a report, in the image below.
In the “Discrimination” field, enter the full name of the investment fund and inform which bank or brokerage company made the application.
In the “Status on 12/31/2020” and “Situation on 12/31/2021” fields, put exactly the values in the income report provided by the bank.
Click “OK” to complete filling the form.
Repeat the above procedure for each investment fund to be declared.