Support Query
How do I treat dividends received for shares held for less than 45 calendar days?
Solution
Dividends received from shares held for less than 45 days will need to have their franking credits manually adjusted.
If you are using a bank feed such as the BGL Bank Data Service, dividends that are automatically matched can be edited in the Transaction List. You can adjust the franked amount by locating the transaction in the list, and clicking on it to edit the dividend and produce the More Details Panel. See step 5 below on how to edit the franking credit amount.
| From the Main Toolbar, go to Accounting. |
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| Select Transaction list |
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- From the Transaction List screen, select New Transaction. From the drop-down list, select Bank Statement.
- Input the Date of the transaction and a Reference number (Simple Fund 360 will automatically produce a reference number, but it is editable). You can include a description of the transaction in the Description box.
- Under the Account heading, select the bank account from the Select an account box.Click on the next Select an account box. Begin typing and select account 23900/INVESTCODE.
- Input the amount of the dividend received. Simple Fund 360 will post a corresponding entry to the bank account fields on the screen (if you post a Debit amount to the other account, Simple Fund 360 will post a Credit to the bank for the same amount, and vice versa).
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Record the dividend information in the Dividend Details section. Simple Fund 360 will assume the dividend is fully franked. Edit the Dividend Details panel to allot the entire dividend amount under the franked field. Remove any amount appearing in the Franking Credits field.
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After you have entered all information for the transaction, select Post to add the transaction and to view the Transaction List screen, or select Post & Add Another to add the transaction to the Transaction List, but remain on the Bank Statement screen.
The holding period rule applies to shares bought on or after 1 July 1997. It will apply to you if you sell shares within 45 days of buying them.
Reports
The CGT Register Report and the Realised Capital Gains Report can be used to confirm which purchase parcels have been held for less than 45 days.
More Information
The 45 Day Rule also known as the Holding Period Rule requires resident taxpayers to continuously hold shares "at risk" for at least 45 days (90 days for preference shares, not including the day of acquisition or disposal) in order to be entitled to the Franking Credits as a franking tax offset.
The Last-in First-out (LIFO) Rule
The LIFO rule operates to prevent taxpayers from manipulating the hold period that shares are required to be held at risk by buying new shares and choosing to sell other shares from their portfolio that have been held for a longer period. The LIFO rule applies so that primary securities and related securities are brought together into a group (or bundle) for the purpose of applying the holding period rule. Once this group is established, the sale of any shares from the group is taken to be on a LIFO basis. This means that when a taxpayer sells a security that is included in the group within the relevant qualification period, the date that the security was acquired is taken to be the date on which the most recently acquired securities in the group were acquired. The ATO update also provides an example to demonstrate how the LIFO rule operates. Click here for more information.