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RE: Treatment of Tax Deferred distributions

MySF2 — Mon, 25 Jun 2007 17:55:15 GMT

Hi,

The doubling up could be due to the way in which the reversal was processed. It may not have re-adjusted the cost base correctly, which would explain the difference between the cost base as shown on the balance sheet and the asset report. Please send through your fund file to info@mysf.com.au, specifying the asset in question. We can make adjustments that change the cost base of the asset so that it is in line with the report.

With regards to the previous posts about incorrect capital gain calculations, you should always process events in chronological order. If events that affect the cost base and/or the number of units owned for a specific asset are not recorded before the sale is processed then the gains on the sale are calculated based on the incorrect cost base. While it can be difficult to process these events in order, especially when details are not made available by certain companies, the software cannot reliably recalculate the results of preceding events.

Regards,

MySF

RE: Treatment of Tax Deferred distributions

tonyhollings — Thu, 21 Jun 2007 16:23:40 GMT

Any progress please.

I recently upgraded to 3.0.0 and again revisited this item.

I have now reversed all distribution and sale journals and the sale record which effectively leaves me with only the original purchase. However, when I run tne Asset Movement report, it shows a Closing Cost balance which is less that the purchase price. Coincidently, the cost reduction is 2 * the tax deferred amount of one of the distributions.

If I run the Account Ledger Report for this asset, the values are correct, even when distributions are posted.

Regards

Tony

MySF2 — Thu, 07 Jun 2007 21:44:37 GMT

Hi,We need to spend additional time in finding what causes this problem. We will post information here as soon as possible.Regards,MySF

tonyhollings — Thu, 07 Jun 2007 21:44:37 GMT

Continuing from above, one of the distribution tax deferred amounts is now double counted when adjusting the cost price of the parcel.I had reversed all journals and the sale record to return to the original opening balance. This is just a single purchase made in the previous financial year.However, when the first of the two distributions is processed, double the tax deferred amount is applied as a credit to the asset account (as displayed in the Asset Movement report) even though the journal entry shows the correct amount. All other components appear correctly applied as is the second distribution. If I process the sale, then capital loss is incorrect and carriss over to the P&L.Any further assistance appreciated.RegardsTony

tonyhollings — Thu, 07 Jun 2007 21:44:37 GMT

I played around with the Sample Fund and was able to replicate the incorrect gain/loss error.I had previously processed annual transactions in a general sequence of buys, sells, dividends and distributions. Where distributions were processed after sales, the calculated gain/loss was not adjusted by any tax deferred amount even though the distribution generated appropriate journal entries for the tax deferred amount against the asset account. Perhaps there needs to be a warning/error message flagged to identify this as an issue particularly where distribution statements are issued after the end of financial year and updating of distribution details is likely to occur after sales.I was able to get the sequence correct by reversing the sale records, verifying distribution components and re-processing the asset sale. Still have a minor error (seems to be double counting one amount) but not this one.In terms of amounts showing in the Increase in Market Value account, this account is also shown on the Balance sheet before rollover if the Show Member Profit option is selected. I haven't yet rolled over the year in question.Many thanksTony

MySF2 — Thu, 07 Jun 2007 21:44:37 GMT

Hi,We have just checked this and have not been able to find an error.When you check the cost base of the share before and after a distribution which contains a tax deferred amount you should see a reduction in the cost base of that asset. This will then mean an increased overall capital gain when that asset is sold. If this is not what happened, please check the distribution entry to make sure that the amount was entered into the tax deferred field. You can check a past distribution entry by selecting the transaction in the Transaction Reporter and clicking on the View Additional Information at the bottom of the screen.I am not sure why this amount would have appeared in the Increase in Market value on the Balance Sheet (when run with revaluations) as processing distributions or selling assets has no effect on that amount. The only time the balance of the Increase in Market Value accounts changes is at the end of year rollover.In terms of correcting this, you may need to edit the transaction that was created from the sale to reduce the capital gain posted and if that is changed you should also edit the sale record from the sale, which can be viewed at Housekeeping > Utilities > View and Edit Sale Records.Please let us know if you would like any further assistance.Regards,MySF

Treatment of Tax Deferred distributions

tonyhollings — Thu, 22 Feb 2007 04:11:19 GMT

I owned some shares and disposed of them during the financial year.During the period of ownership, 2 distributions were made with each including a tax deferred component. The distribution transactions in MySF produced journal entries to reduce the cost base by crediting the value of the tax deferred components against the asset account.However, when the shares were sold, MySF calculated profit/loss against the original purchase price and not the adjusted cost base which should apply. This then incorrectly calculates realised capital gains in the P&L.In addition, the amount of the total tax deferred distribution components appears to have been added to Increase in Market value in the Balance Sheet.Another share with similar distribution components, but still held shows a correctly adjusted Cost in the Closing Balance columns of the Asset Movement Report.Can you advise how to rectify.RegardsTony