Note
BGL does 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 these steps.
Overview
The ATO have released the following: CR 2019/5 Income tax: BHP Group Limited - off-market share buy-back.
Details | Amount per share |
---|---|
Dividend Component | $27.26 |
Capital Component | $0.38 |
Excess of the Tax Value over the Buy-back Price. | $4.54 |
Sale Consideration | $4.92
(capital component + excess of the Tax Value over the buy-back price) |
Buy Back Price | $27.64 |
Instructions
The following components will need to be calculated for the fund's holding of BHP shares:
- Capital proceeds received (Sale Consideration)
- Excess of the Tax Value over the buy-back price
- Dividend
- Capital component of sale consideration
After this, a journal will need to be posted to process the share buy back
Example
A fund with 1,000 BHP shares participated in the buy-back
The components of the transaction are calculated as:
- Capital Proceeds: $4.92 x 1,000 = $4,920
- Excess of Tax Value: $4.54 x 1,000 = $4,540
- Dividend: $27.26 x 1,000 = $27,260
- Bank receipt of buyback price: $27.64 x 1,000 = $27,640
The following journal will need to be posted in Simple Fund 360:
Account Name | Account Code | Units | Debit | Credit |
---|---|---|---|---|
BHP Securities | 77600/BHP.AX | 1,000 | $4,920 | |
Investment Expense | 37500/BHP.AX | N/A | $4,540 | |
Dividends Received | 23900/BHP.AX | N/A | $27,260 | |
Bank | 60400/Bank | N/A | $27,640 |
Investment Expense
This Investment Expense account had the Tax Label set to Not Applicable - Permanent Difference. See Non-deductible tax expense for more details on changing this.
If you wish to create a new account to record this permanent difference, please refer to Add an Account
.