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 | 0 |
| Capital Component | $ 0.8940 |
| Excess of the Tax Value over the Buy-back Price. | $ 0.047 |
| Sale Consideration |
$ 0.9410 (capital component + excess of the Tax Value over the buy-back price) |
| Buy Back Price | $ 0.8940 |
Instructions
The following components will need to be calculated for the fund's holding of PAF shares:
- Capital proceeds received (Sale Consideration)
- Excess of the Tax Value over the buy-back price
- Dividend
- The 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 PAF Shares participated in the buy-back.
The components of the transaction are calculated as:
- Capital proceeds: $0.9410*1,000 =$941.00
- Excess of the Tax Value: $ 0.047*1,000 = $47.00
- Dividend: $0
- Bank Receipt of buyback price: $0.894*1,000=$894.00
The following journal will need to be posted in Simple Fund 360:
| Account Name | Account Code | Units | Debit | Credit |
| PAF Securities | 77600/PAF.AX | 1,000 | $941.00 | |
| Investment Expense | 37500/PAF.AX | N/A | $47.00 | |
| Bank | 60400/Bank | N/A | $894.00 |
Investment Expense
The 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.