Splitting a Managed Investment with Tax Deferred amounts into its individual assets

Support Query

How do I split a Managed Investment into its individual assets where there is tax deferred amounts in the Managed Investment?

Overview

To split a Managed Investment into its individual assets where Tax Deferred amounts are attached, complete the following steps:

1. Create accounts for the investments that you wish to separate from the current Managed Investment.
   
   Note: This step is not needed if the fund already has the investment account in its Chart of Accounts.
   
2. Dispose of the managed investment and acquire the individual assets both at cost less deferred tax to prevent any CGT effects being triggered.
   
3. Perform a cost base adjustment to the investments acquired in the previous step to reflect the deferred tax value that was not applied during the transfer.
   
4. Create a linked Distributions Account - 23800  for the investments acquired in step 2 to record the Tax Deferred amounts.
   
   Note: This step will not be required if the investment does not have any Tax Deferred amounts.
   
5. Post a "dummy" transaction recording the Tax Deferred components in the more details screen of the transaction.

What to do in Simple Fund 360

Example

A fund has a Managed Investment that cost $2,200 carrying a Tax Deferred amount of $200. This Managed Investment is composed entirely of 100 ANZ shares and was purchased on 20/08/2010.

The fund could wish to split its Managed Investment for the 2017 Financial Year into its individual assets either for Cost Base Reset purposes or to take advantage of daily revaluations performed by Simple Fund 360.

This example assumes that the fund does not have ANZ shares set up as an investment account in the Chart of Accounts.

1. Create the investment accounts
   Refer to this guide on adding investment accounts
   

2. Dispose of the Managed Investment and acquire the individual assets
   The following transaction will be entered to record the disposal and acquisition of the individual assets:

   Account	Units	Debit ($)	Credit ($)
   77600/ANZ	100	2000*
   74700/MANAGED_INVESTMENT	1		2000*

   _{*Cost - Deferred Tax}

    

   From the Main Toolbar, go to Accounting.
   Select Transaction list

    

   Click New Transaction and select Journal

   
   

   
   The transaction will be entered into Simple Fund 360 as below:

   

   Ensure that the original purchase date for the Managed Investment is entered into the acquisition entry's Investment Purchase Details:

   
   For the disposal entry, click on  and ensure that the tax deferred amount is appearing in the Disposal Details screen.

   
   Here, the tax deferred amount of $200 can be seen

3. Cost base adjustments to acquired investments
   The following transaction will be entered to record the cost base adjustment upwards needed to reflect the tax deferred amounts not applied during the transfer:

   Account	Units	Debit ($)	Credit ($)
   77600/ANZ	0	200
   77600/ANZ	(Blank)		200

   Click New Transaction and select Journal

   

   

   The transaction will be entered into Simple Fund 360 as below:

   

4. Create linked distribution account
   Edit the investment account for the security to add a linked Distributions income account.
   
   In the Edit Investment Account screen, click on  to display the linked accounts:
   
   Add a linked Income account:
   
   Set the Account Code for the newly added linked account as 23800 Distributions Received
   

5. Post a dummy transaction recording the tax deferred amounts
   The following transaction will be entered to record the tax deferred amounts against the investment:

   Account	Debit ($)	Credit ($)
   60400/Bank	0
   23800/ANZ.AX		0
   Tax-Deferred Amounts	200

   Click New Transaction and select Bank Statement

   

   

   The transaction will be entered into Simple Fund 360 as below:
   Ensure the Tax Deferred amounts are entered in the Distribution Details screen:
   

   Note: This method will cause a Unrealised Movement in Market Value downwards to be recorded for the Managed Investment in the Notes to the Financial Statement for the fund (Note 7). If you do not wish this to appear in the Notes, manually edit the report to remove this line.

What happens when multiple parcels are disposed of where only some parcels have deferred amounts attached?

A fund has the following transaction timeline:

In this scenario, the tax deferred amounts recorded by posting to 23800 - Distributions for the securities will be attached to the 1st parcel of 200 units only.