Disclaimer
BGL do not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of those listed.
Overview
On 26 October 2018, Insurance Australia Group (IAG) shareholders approved the capital management initiative.
The capital management initiative involved the following:
- Distribution of $0.25 (25 cents) per share
- Share consolidation of 1000 IAG shares to 976 IAG shares
The distribution of $0.25 per share comprised of:
- Capital component
- $0.195 (19.5 cents) return of capital
- Dividend component
- $0.055 (5.5 cents) fully franked dividend
The share consolidation resulted in every one IAG share converted to 0.976 of an IAG share.
Key Dates
- 26 October 2018
- Date of AGM and shareholder approval
- 30 October 2018
- Ex date - ordinary shares traded from this date will not be entitled to the special dividend or capital return
- 1 November 2018
- Record date for the capital management initiative
- 2 November 2018
- Record date for DRP participation
- 5 November 2018
- Share Consolidation Date
- 26 November 2018
- Payment date for special dividend and capital return
- DRP shares issued
- Dispatch of holding statements in connection with shares received under the DRP
Instructions
Scenario
The fund held 1,000 shares as at the record date.
Distribution
The components of the distribution received by the fund are:
- Capital component
- = $0.195 x 1,000 return of capital
- = $195.00 return of capital
- Dividend component
- = $0.055 x 1,000 fully franked dividend
- = $55.00 fully franked dividend
Share consolidation
- Shares before consolidation
- = 1,000 shares
- Shares after consolidation
- = 0.976 x 1,000 shares
- = 976 shares
Instructions for Simple Fund 360
The following transaction will be recorded
| Account | Units | Debit | Credit |
|---|---|---|---|
| Bank | N/A | $ 250.00 | |
| IAG Shares | 0 | $ 195.00 | |
| IAG Dividends Received | N/A | $ 55.00 |
To record this transaction, the bank transaction will need to be matched.
To do this, navigate to the Smart Matching screen screen.
- From the main toolbar, select Accounting then select Smart Matching.
- Locate the unmatched bank transaction from the corporate action and click Review.
- Click Split:
- Select the 77600/IAG.AX account and record 0 units and the return of capital amount ($195 in this example)
- Next, record the dividend entry. Confirm that the amount is fully franked:
- Click Match.