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
| Details | Amount per share |
|---|---|
| Dividend Component | $21.42 |
| Capital Component | $2.01 |
| Excess of the Tax Value over the Buy-back Price. | $3.59 |
| Sale Consideration | $5.60
(capital component + excess of the Tax Value over the buy-back price) |
| Buy Back Price | $23.43 |
For more detail refer to the ATO class ruling
Instructions
The following components will need to be calculated for the fund's holding of CTX 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 CTX shares participated in the buy-back
The components of the transaction are calculated as:
- Capital Proceeds: $5.60 x 1,000 = $5,600
- $3.59 x 1,000 = $3,590
- Dividend: $21.42 x 1,000 = $21,420
- Bank receipt of buyback price: $23.43 x 1,000 = $23,430
The following journal will need to be posted in Simple Fund 360:
| Account Name | Account Code | Units | Debit | Credit |
|---|---|---|---|---|
| CTX Securities | 77600/CTX.AX | 1,000 | $5,600 | |
| Investment Expense | 37500/CTX.AX | N/A | $3,590 | |
| Dividends Received | 23900/CTX.AX | N/A | $21,420 | |
| Bank | 60400/Bank | N/A | $23,430 |
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
.