Distribution Tax Automation

This is the first financial year I am using BGL Simple Fund. I have largely found simple fund relatively user friendly, and the Corporate Actions for listed securities work okay.

I have received the tax statement for one of the managed funds (Magellan High Conviction Fund). I have watched the video on how the process works and I get most aspects of it. What I am struggling with is the following;

  1. Distibutions announced for 30/06/2020. I will process this to recognise the income for Financial Year ending 30/06/2020 - but I expect the exit unit price to fall by the amount of the distribution. However, the exit price being used to value the units isn’t the ex distribution price, but the days exit price. I will have the income, and final price will have a unit price that includes the income - looks like a double up to me?
  2. I am reinvesting the distributions - so need to create entries to recognise the asset (assuming entry 1 above is Debit Distribution Receivable, Credit Distribution Income), the entries to recognise this will Debit: the fund, credit distribution receivable
  3. Is this the way the process is supposed to work - i am trying to utilise the automation process but finding it a bit complicated
  4. One of the other funds - Hyperion, pays distributions quarterly - i have processed manual transactions throughout the financial year - how does this integrate with the year end process.

Just trying to understand how this all works.

Thanks in advance.

Welcome to SF360. You will have lots of questions but the knowledge base is quite good.
Reinvested Distributions - I find it easier to bring the June 30 reinvested distribution into the assets (not 61800 Distribution Receivable). If you drill down on the asset prices it will show an exdiv price which should line up with your managed fund June 30 report. I find it easiest to edit the asset price list and place my own value on it at June 30 (the lower value). BGL has an alternative re Badges but that can confuse other assets. By setting your value, it leaves an audit trail and hence you can use the default badge.
In Question 2 you mention the need to create entries. That will just calculate a market value using whatever price is listed for June 30. When you close the year and start next year you ignore any June 30 paperwork and pick up the next distribution in September.
Question 4: Hyperion. If they paid cash and no reinvestment you would pick up June 30 distribution as a 61800 distribution receivable. Insert the annual tax statement details on one of the distributions.
Hope this helps.

Thanks Hugh, much appreciated. A bit of a learning curve but it will get easier.

Regarding point one - my initial thoughts were to do exactly that (had a journal and deleted it). I have added a custom price for this fund on 30/06/2020, same as the ex div price, and also changed the order list of the Badges so that it defaults to Custom price. I have run quick calculations on the price on 01/07/2020 and note it defaults to the exit price (which is the second after custom price). The accounting entry to recognise asset/distribution income now works perfectly.

I will work through other issues - much appreciated.

I am not sure that the following will answer your question but with my Platinum trusts I add a custom price for the 30 June which is the ex div price and on processing Create Entries the custom price overrides the cum div price automatically downloaded. (Investment Securities List) Then journal entry distribution as income credit against 61800 (distributions receivable) and then balance this in the new financial year when bank deposit is received. I know nothing of your Magellan fund but see a reinvestment price of 1.4854 that would appear to be the exdiv price (?). regards

PS The key is that you wont see the custom price used until you Create Entries.

Just received the Magellan Statement. Shows the units are re invested the day after distribution date (01/07/2020), so will need to debit Distribution Receivable and credit distribution received on 30/06/2020. Debiting the assets will increase my units which won’t tie to the statement.

On 1st July I will debit the assets and credit distribution receivable.

What’s surprising me is now the system revaluations - too high, am assuming this will fix itself once I run create entries? It’s giving me a higher cost base than the actual one.

Still waiting on a few more tax statements.

I think we are agreeing in that I would simply apply the value of the distribution to the income account on 30 June and debit Distribution Receivable and create a custom price (ex div) for the same day. On 1July I would be acquiring the units at the distribution cost with a credit for distributions received. The ex div price of the units at 30 June will show when Create Entries done. (I did this with my Platinum Trusts but instead of reinvesting my debit was cash to the bank account. The auditor has signed off on this.)
All the best

Hi @common_man @Hugh @Leslee
You could setup the revaluation order in the Badge to use Ex-Dist price first (drag to the top). That way you don’t have to add custom price (same as Ex-Dist price) for 30 June. The funds attached to the Badge will have this method applied. Daily system revaluation and Create Entries will use this method.
Is there a reason you would want to revalue using Exit price by default?

The Exit price would be the most relevant price to use for year end market valuations - because that would be how much it would be to realise those units?

I don’t see a reason why any other price should be used.

could I just clarify your comment about setting the Ex-Dist to the top of the Badge and having this method applied to daily system evaluations and Create Entries? Would this approach mean that unit values would remain the same for the whole period (quarter/year) even though exit values increase/decrease over time i.e. give a false value of the holding at any point of time other than on the Ex-Dist date? I mention this in answer to your last sentence/question if you wanted to value a member’s interest perhaps to make a payment part way through a year (close an account or lump sum?).

Ah right, I’m with you now. If I had the following setup in the Badge (as an example), revaluation will use custom price on e.g. 30 June. If 30 June custom price is not available, it’ll use Ex-Dist price and follow by Exit and NAV.


Using your Magellan fund MGE0005AU example and based on the setup above - year end create entries revaluation will use 30 June Ex-dist price (as I don’t have custom price). After distribution is paid, Ex-Dist price will not be available, then daily system revaluation will use Exit price.

Thanks All.

@jng your solution makes sense but the ex distribution price won’t be the valuation price for the days until dividends are paid - this keeps changing via daily unit pricing. Having the custom price set as ex distribution price for only 30/06/2020 seems to solve this.

I am still waiting for one more tax statement then I will run the whole process.

Unrelated issue - I have just noticed that for international securities - system prices stopped updating on 07/08/2020 (for NYSE and NASDAQ) - unusual for this to go on for 20 plus days.

No worries @common_man.

Re international prices - yes this is a known issue which we are currently working on a fix, that should be pushed out some time next week.

Hi jng
On the subject of distribution allocations, I have to allocate a Tax Deferred Amount from a non AMIT Trust (Spark Infrastructure SKI) and the advice from SKI is that it should reduce capital cost.

Given it is a non AMIT, where can I enter this amount and know that BGL is offsetting the amount to capital cost of the units?

Hi @MSFTrustee,

Amounts entered into the Tax Deferred field in the Distribution transaction more details (within SF360) - would reduce the investment cost base. If this is for the 2020 annual tax statement, would you mind sending through the tax statement to distributionstatements@bglcorp.com.au so we could look at adding data for the Distribution Tax Automation function?

If this is for 2019, the Distribution Tax Automation already has system tax data for SKI so you can generate tax components and reconcile it with the statement.

Hi @common_man

Please be informed the issue with international share prices have now been resolved. Thank you for your patience.

@jng Thanks, I can see international prices have been working well.

One more question - I have units in VAS and IOO. My understaning is that these being ETF’s tax is supposed to be recgonised in the FY20 financial year, but paid in FY21.

I note the corporate actions happen on the day the tax is paid, which is in FY21. I am assuming I will need to process accounting entries as at 30.06.2020.

Sorry too many questions - just trying to make sure I get this right first time.

Hi @common_man, thank you for confirming international share prices are now working well.

VAS and IOO are pretty similar. Yes you are right e.g. last distribution of the 2020 year for VAS is in July 2020 (which goes over to 2021 year). So you would record as accrual for 30/06/2020 and clear off the accrual when it is paid in July.

For DRP, it is the same process where you would first record the accrual on 30/06/2020:
CR 23800/VAS
DR 61800/VAS

Then come July 2020, you would process DRP in the Corporate Action screen to clear off the 61800 amount by moving the distribution amount from 23800 into the 61800 input box.

Hope that helps.