Guide 2 - directshares
Contents
1. Was SC george 3 Type the quantities of each share parcel you want to dispose of in the Sale Qty column 4 Click Save You should now be able to see any changes that the switch has made to your portfolio s tax position in the Realised CGT and Unrealised CGT screens and reports Was SC george CARRYING FORWARD LOSSES The Carried Forward Losses function allows you to carry over any residual capital losses for a tax year The Carried Forward Loss value should agree to the entry on your tax return submitted to the ATO To carry forward a loss into the next financial year 1 From Trading Activity click Carried Forward Losses 2 Click Add 3 Type the date for the start of the financial year into which you want to carry forward any capital losses 4 Type the amount you are carrying over Note Tax Tools does not automatically carry forward losses from one financial year to the next If a year elapses without any gains to offset against the losses must be manually carried over again using this screen 5 Click Save Example In 2007 08 losses to the value of 2 500 00 were carried forward into 2008 09 In 2008 09 capital gains to the value of 1 500 00 were incurred This allows the investor to offset this amount from the carried over loss Upon completion of the financial year the remaining value of 1 000 00 can be carried forward to 2009 10 This value must agree to the entry on your submitted tax ret2. Company options A contract by which a company is bound to issue new securities usually at a set exercise price to enable the acquisition of future equity in that company The option holder is entitled but not required to exercise them Consolidation A reduction in the number of a corporation s shares outstanding that increases the par value of its stock or its earnings per share The market value of the total number of shares market capitalization remains the same Contract note A written document confirming a transaction between us and you which details the costs type and quantity of shares traded Convertible note A loan made to a company at a fixed rate of interest with the right to be either redeemed e g repaid by the company for cash or converted into ordinary shares at a predetermined date Convertible securities Fixed Income Securities which are convertible by the holder or automatically by their terms of issue into equity securities Corporate action A corporate action is an action taken by an entity for the purpose of giving an entitlement to holders of a class of the entity s securities Examples of corporate actions include rights issues bonus issues dividends or other payments or offers under a buy back scheme There are two types of Corporate Actions voluntary and mandatory Was SC george Cost base Custodian Deferred settlement Discounted gain Distribution Dividend imputation Dividend rei
3. Merger Takeover Bonus issue Float IPO Rights issue Pro rata entitlement offer Free attaching options shares Call payment Off market buyback Stapling Destapling Exchange traded options ETOs ETOS What is an option Trade flow in Tax Tools Viewing write take up options Viewing exercising options Was SC george 19 20 21 22 Taking up rights Converting notes and preference shares Getting help Glossary A St george ABOUT THIS USER GUIDE This guide is designed as a supplement to the Getting Started with Tax Tools user guide Where the Getting Started guide describes the basic functions you need to know in order to start using Tax Tools this document describes more advanced features that are designed to enrich your experience with Tax Tools and help you deal with more complex asset types other than ordinary ASX listed shares Included in this document is information on how e corporate actions are processed in Tax Tools e the tax optimisation engine works e to carry forward losses from one financial year to another e to view options rights issues preference shares and convertible note transactions Was SC george HOW TAX TOOLS WORKS A core function of Tax Tools is its Capital Gains Tax CGT optimisation designed to assist you in achieving your CGT objectives Tax Tools takes into account corporate action activity and distributions that impact the cost base Apart from pa
4. No 238277 a Participant of the ASX Group at the request of St George Bank A Division of Westpac Banking Corporation ABN 33 007 457 141 St George Execution settlement and clearing is through E TRADE Australia St George does not represent E TRADE Australia Similarly E TRADE Australia does not represent St George Investment advice is not provided to online directshares clients 2003 E TRADE Financial Corporation and EXTRADE Australia All rights reserved The tax rules to be applied depending on the entity the assets are held in One of four choices must be selected when setting up a portfolio The tax rules are different for each type Broadly a security that does not bear deferred interest and is not capital linked Any gain or loss is not subject to CGT legislation but rather treated as income in the year it is earned Common traditional securities are bonds and debentures Share dividends paid by companies which are not subject to Australian tax or paid by Australian companies but before the introduction of dividend imputation in 1986 Recipients of unfranked dividends are subject to tax at their normal marginal rate Refers to securities which are not listed on the ASX or any other organised stock exchange Profits which have not yet been received because while the price of the asset has risen the owner has not yet sold Means a corporate action which is discretionary That is a shareholder must elect to pa
5. The total premium received write or paid take Brokerage The brokerage paid for this transaction GST The GST paid for this transaction This screen is view only You cannot take up or write options using this function Viewing exercised Options The Option writer is exercised against if the option taker decides to take up the right to buy or sell shares at the exercise price before expiry Alternatively the option taker can exercise the option and trade the underlying shares You can view exercised Options using the Trading Activity gt Options gt Exercise Options Single Portfolio screen This screen is view only You cannot exercise options using this function AL SC george TAKING UP RIGHTS Rights may be allotted to a portfolio as a result of an entitlement The automatic entitlements are generated by Tax Tools as part of the overnight recalculation process When the rights entitlement is taken up the details are updated in Tax Tools and are visible in the Take Up Rights screen If these rights are not taken up they automatically lapse at the appropriate date To view take up rights issues 1 From Trading Activity gt Take Up Rights click Take Up Rights Single Portfolio The following fields describe the rights issue that has been taken up Field Description Exercise against This is the default option for taking up rights Security The security code for the rights offer Qty taken The quanti
6. date of allotment On the allotment date the new securities are transferred from the temporary code to the ASX code via a code change corporate action If the new security allotted via the offer is not the same as the original security for example options issued based on ordinary shares held then the units are directly allocated to the proposed ASX code upon take up and no code change is required The rights not taken up during the course of the offer are cancelled at zero cost the day after the offer closes If a bookbuild is conducted after the close of the offer and the final price is higher than the offer price the cancellation of the rights is replaced by a sell at a consideration which is the difference between the final price and the offer price Was SC george Pro rata entitlement offer An Entitlement Offer is treated created in the same way as a rights issue in Tax Tools Free attaching options shares Free Attaching Options Shares issued via a rights issue entitlement offer placement or an IPO are allotted on a pro rata basis based on the number of rights taken up or number of pre listing units purchased on the allotment date They are usually allotted at zero cost unless a cost apportionment is announced by the company Call payment The corporate action moves the partly paid units held to a new partly paid or fully paid code as specified by the company as at the date the new securities begin trading on
7. for the portfolio will be individual partnership superannuation company or trust Different CGT tax rules apply to each CGT Gain either realised or unrealised before any losses have been applied Shares that rank before ordinary shares in the event of liquidation of the issuing company and that usually receive a fixed rate of return This is the date from which auto generated transactions are applied It is usually the first trade date in a Tax Tools portfolio and is therefore entitled inception The CGT gain received after the sale of an asset e g shares units The activity of updating the portfolio and recalculating the CGT position by clicking the Recalculate To button situated on all activity screens The date by which a shareholder must officially own shares in a company to be entitled to a dividend Shares that can be re sold to the company that issued them on a stipulated maturity date for their face value plus dividend rewards An issue of rights where the offeree can choose to take up the rights offered let them lapse or trade them on the market An offer made to a holder of an existing security to purchase new securities issued by the same company at a discount to the existing market and able to be exercised within a relatively short time span such as 30 to 60 days SRN is allocated by an issuer to identify a holder on an Issuer Sponsored or certificated sub register A combination of separate classes of
8. securities able to be traded separately Your starting position is defined as the start of the financial year prior to the financial year in which you upgraded your subscription to Tax Tools Plus or Premium This indicates the condition of the Tax Tools portfolio to be updated with prices and future corporate action activity It will be active or inactive Unsecured bonds that in the event of liquidation rank behind other debt but ahead of shareholders Tax Credit is associated with a franked dividend and represents income tax paid by the company It is treated as assessable income to the shareholder but can be used as a tax rebate by Australian resident recipients This is the effective date for tax calculation purposes and may vary to the transaction date For instance a bonus issue date will bear the tax date of the original purchase of shares it relates to Tax on certain types of income distributed from trusts can be deferred until the holder disposes of the units The cost base is reduced by the tax deferred amount thus increasing the taxable CGT gain Income or gain which is not taxed Shares purchased for a specific security at the same time and price Was SC george Tax type Traditional security Unfranked dividends Unlisted securities Unrealised gains Voluntary Corporate Action The directshares service is provided by ETRADE Australia Securities Limited E TRADE Australia ABN 93 078 174 973 AFSL
9. the ASX on a deferred settlement basis The original quantity and tax dates are retained on the new security but the original cost base is increased by the call payment amount per share unit Off market buyback Details of off market buybacks are recorded in the Tax Tools database once the successful completion of the buyback is announced by the company Most of the information stored in Tax Tools is derived from this announcement supplemented by the buyback booklet provided by the company in question The deemed tax amount is also recorded in the database and is used as the sale disposal amount in the realised CGT calculations The ex entitlement date for the Buyback as per the Buyback Booklet is recorded and any parcels bought after this date is excluded from the buyback Any shares bought prior to the ex entitlement date but within the 45 day period before the buyback date will be eligible to participate in the buyback but the franking credits will be forfeited Stapling Stapled securities which have different NTAs Net Tangible Asset for the underlying stocks are usually stapled in Tax Tools so that the underlying securities with dummy codes are displayed for each transaction For example each WDC Westfield Group stapled security comprises e 1 Westfield Share WDC WSF e 1 Westfield Trust Unit WDC_WFT and e 1 Westfield America Trust Unit WDC WFA Distributions and CGT calculations are recorded against the underl
10. Beyond The Basics of directshares Tax Tools Plus amp Premium User Guide CHOOSE THE TAX TOOL THAT BEST HELPS YOU MANAGE YOUR TAX ONLINE Tax Tools Standard Tax Tools Plus Tax Tools Premium What is it Who could benefit Benefits Features Products reported on Pricing Free summary report on income and realised CGT New and regular investors that do not settle trades through a margin loan Simple straight forward reports e Keep track of dividends e Easy to download and provide to your accountant Single downloadable PDF Useful annual Income and CGT summaries e Cost base calculations Reports take into account not only share positions but dividends received too Income from Equities Options and Warrants Income on Managed Funds Global Shares and securities settled through a margin loan are not included e Free Interactive subscription service with information and tools to report on realised amp unrealised CGT e Regular and more active investors Day Traders Investors with large portfolios e Additional functionality and reports for proactive management of tax implications Accessible all year round not just end of year Potential to save you and your accountant s time in preparing your tax return e What if scenarios to aid your decision making Up to 8 in depth reports Investment activity data updated daily e A
11. D This section describes the Disposal Allocation Methods that are available in Tax Tools Note Tax Tools attempts to preserve all CGT assets that were acquired on or before 19 September 1985 pre CGT as they are not taxable Once post CGT assets have been used pre CGT parcels will be chosen If you want to use these pre CGT parcels you will have to use Manual Selection as your disposal method The default disposal allocation method is Minimise Defer gains Tax Tools will choose the parcels that result in the smallest net taxable gain for the portfolio This minimises the amount of CGT payable in the financial year It is preset within Tax Tools and you do not have to do anything if this is your preferred method Other methods are First In First out Tax Tools will elect to sell the oldest parcels held by the portfolio first For example if you dispose of some of the stock Tax Tools will select the quantity of units sold from the parcels purchased first and then move sequentially down to the most recent parcel Manual Selection Tax Tools allows you to choose which parcels to dispose When you select Manual Selection as the Disposal Allocation Method for a sell transaction Tax Tools displays the Manual Selection icon MAN against that transaction For example MAN 28 05 2009 5 000 5 272 26 360 00 0 gol 4 06 2009 If you click this icon Tax Tools displays the Manual Parcel Selection For Disposals screen when y
12. ax dates are retained Was SC george In specie distribution New units in a different company are allotted via the corporate action initially to a temporary deferred settlement code usually the ASX code with a suffix of XE XF and so on as per the ratio specified by the company The quantity of units and tax dates of the original parcels remain unchanged However the cost base is reduced usually by the cost base of the new units or as otherwise specified by the company Where cost base calculations are not available at the time the units are allocated at approximate or zero cost with a note stating the same Once correct cost base calculations are available from the company the corporate actions are amended When the stock being issued is in a listed company a second corporate action is created changing the code from the temporary code to the listed code on the despatch date If the stock issued is in an unlisted company the stock remains on the temporary code and will need to be transferred via manual adjustment transactions to a service asset if required If demerger relief is applicable the tax date of the new shares units is the tax date of the original parcels otherwise they are deemed to have been acquired on the date of the distribution In specie dividend Similar to In Specie Distributions in all respects except one an Income Entry is also generated for the purposes of recording any Franking Credits attach
13. change in the legal custodian but not a change in the beneficial owner In Tax Tools this refers to the date of the first transaction of the activity it relates to e g a DRP will be either from the first buy or when the company first offered the DRP whichever came first This applies to assets which were acquired after 20 September 1985 and before 30 September 1999 and held for at least 12 months where the cost base has been adjusted increased by applying the indexation factor per the CPI Note An indexed cost cannot be used in determining a capital loss This applies to the difference between the disposal value and the indexed cost base Uncertificated securities that are administered by the issuer of those securities rather than a broker or financial institution For CGT purposes a capital loss can be offset against a capital gain If applicable offset amounts can be reviewed in the Tax Tools Realised CGT Report The process of manually allocating sale parcels against buy parcels for CGT purposes This selection would only be used for historical matching or very rare circumstances when you wish to override Tax Tools optimisation process is this a reference to p25 The process of allocating sales against buy parcels to maximise the taxable gain Mandatory Corporate Action means a Corporate Action which is not discretionary and affects all shareholders of the shares in question The method describes the way the gain lo
14. click Change Disposal Allocation Method 2 Select the New Parcel Allocation Method from the drop down list 3 Type the date range in the From Date and To Date boxes 4 Click Apply Method Switch 5 Recalculate the portfolio To change a sell transaction disposal allocation method manually 1 From Trading Activity click Transaction History 2 Select the Sell Transaction and click Edit 3 Select the appropriate disposal allocation method from the Method drop down list 4 Click Save If you selected Manual Selection as your disposal method you need to nominate which parcels of shares you want to dispose To do this 1 From the Transaction History screen click the MAN button MAN in the Method column of the sell transaction you are manually selecting This selects the transaction for manual selection when you next recalculate the portfolio 2 Click Recalculate to Tax Tools displays the Manual Parcels Selection For Disposals screen For example Previous login time 30 Mar 2010 10 38 Manual Parcel Selection For Disposals Qty Sold Stock Being Sold Sale Date Sale Proceeds TMA GROUP OF COMPANIES LIMITED ORD 240 000 TMA FULLY PAID 4 01 2010 7 658 05 Save Canes lt lt lt Previous Next gt gt gt _ Purchase se SR Tax Date Date Lot Nbr nr Cost TEA 14 12 2006 9 1 212009 1 400 000 43 681 59 lt lt lt Previous Next gt gt 240 000 shares units remain to be allocated
15. conversion date Additional cost The information for these three fields is completed automatically Tax Tools calculates the ratios of shares converted New code When converting notes the deemed market value of the ordinary shares at TTT conversion needs to be known and this is the cost base for any subsequent New qty disposal Was SC george GETTING HELP Additional features and functions are described in the following two user guides which can be downloaded from the My Portfolio Tax Tools section of the website e Tax Tools Getting Started e Tax Tools Premium For help with any of the functions included in this guide or any other questions on Tax Tools Plus or Premium please call us on 1300 133 500 between 8am and 8pm AEST Monday to Friday Was SC george GLOSSARY Active This is the status of a Tax Tools portfolio You can view portfolio states in the main Portfolio List screen portfolio should be made active once all historical information has been entered and reconciled to known holdings Once a portfolio is in the active state it will be updated daily with closing prices and any mandatory corporate actions that affect the holdings After offset gain The CGT taxable gain after losses have been offset against gains in the portfolio As at The date the portfolio has been recalculated to All screen and printed reports will be for the As At date ASX code The code used by the Australian S
16. d or share consideration in one or more other companies as set out in the applicable scheme booklet The cash component is reflected via a Sell at the per unit rate specified by the company in order to generate a CGT event Was SC george The share component is reflected on a pro rata basis with either the full cost base being transferred to the new shares or a proportion thereof depending on whether it is a share only offer or a share and cash offer If it is a share only offer then full cost base will be transferred over to the new stock assuming rollover relief is applicable If it is a share and a cash offer then the dollar value for the scrip consideration needs to be calculated in order to arrive at the percentage of the original cost base that needs to be applied to the new shares Takeover A takeover is only entered into Tax Tools once it has become a compulsory acquisition If the offer becomes unconditional but does not reach the compulsory phase the target stock is monitored and if it is de listed from the ASX a share cancellation is entered Apart from that they are processed in the same way as mergers Bonus issue New units are allocated as per the ratio specified by the company The cost base of the original parcel is apportioned across the new shares as well as the existing ones so that the existing parcels are increased by the number of bonus shares received but the total cost base remains unchan
17. e most appropriate strategies for you so please consult your tax adviser if you have questions There is the possibility that amendments to your portfolio could result in an update to your tax report for the previous tax year This may for example be because a listed property trust reports its distributions later in the year If this happens we ll send you an email to let you know a new report is available You will need to accept our Tax Tools Plus amp Premium Terms and Conditions contained within your subscription wizard to access this service You acknowledge that directshares has contracted with Praemium to provide Tax Tools to you The descriptions contained in this User Guide of the way in which Tax Tools Plus and Premium operate have been provided to us from Praemium Was SC george CONTENTS o5 About this user guide 07 07 07 07 08 08 08 08 09 09 11 11 12 42 12 12 13 13 13 13 13 14 14 14 14 15 15 15 15 15 16 17 17 17 17 18 18 How the tax engine works Disposal method selection Splitting tax parcels Loss optimisation Disposal allocation methods Minimise Defer gains First In First out Manual selection Maximise Accelerate gains Changing the disposal allocation method Carrying forward losses Example Corporate Action Types Return of capital Share split Share consolidation In specie distribution In specie dividend Name and or code change Spin off demerger
18. ecurities Exchange to identify listed companies Auto generate These are transactions that automatically update the portfolio by system processes rather than manual input Examples would be a DRP or a bonus issue These update the portfolio when the Recalculate To button is activated Beneficial owner The beneficiary of the asset regardless of the name in which it is recorded under Bonus share plan Usually a plan whereby shareholders may elect to receive all or a portion of the dividend in shares instead of cash You should refer to announcements by the company or contact the company to obtain further information regarding the rules and operation of the plan Bonus shares Additional shares issued by the company to existing shareholders for free usually in a predetermined ratio to the number of shares already held The tax treatment for CGT purposes is determined by the purchase date of the original shares the bonus shares are issued on Capital gain loss The difference between the sale price of a capital asset and its CGT cost base Capital gains tax CGT Tax on the profit from the sale of capital assets such as shares Capital growth An increase in the value in a capital asset such as shares Capital growth is realised as a capital gain when the asset is sold for more than its purchase cost Carried forward losses Unallocated capital losses incurred in previous financial years that have been carried forward to a subsequent financial year
19. ed to the dividends The Income Entry has the DRP Amount field populated to indicate that no cash was received Name and or code change A new asset is created in Tax Tools with the new name and or code and the original units are transferred across to the new asset along with the original cost base and tax date s on a 1 1 basis Spin off demerger Shares units are issued in a new company on a the basis specified by the company via corporate action s created by and as at the effective date of the demerger If demerger relief is applicable the cost base is apportioned across the new units and the existing ones based on the deemed market values on or around the date of implementation and the new shares are deemed to have been acquired at the same time as the original shares Where demerger relief is not applicable and the new units are deemed to have been acquired as at the implementation date that is the date used for CGT purposes and the cost base of the original parcels is generally reduced by the deemed market value of the new shares Where cost base calculations are not available at the time the units are allocated at approximate cost with a note stating the same Once correct cost base calculations are available from the company or via an ATO Class Ruling the corporate actions are amended and a system message is sent out advising of the change Merger Shares in one or more companies are cancelled in return for cash an
20. estor is entitled to a franking credit or reduction in the amount of income tax that must be paid up to the amount of tax already paid by the company Franking credits which are passed onto shareholders who have received franked dividends in relation to their shareholdings See also Dividend Imputation The difference between the current market value or disposal amount and the original amount paid for the asset before CGT rules are applied An asset where Tax Tools maintains pricing distributions and corporate action activity in terms of tax implications across all services A unique reference allocated by a stockbroking firm to an individual or entity when they buy shares if that broker is nominated as the sponsor in CHESS A statement issued to uncertificated shareholders showing the number of shares held and details of any trades made since the issue of the previous holding statement Was SC george In specie transfers Inception Indexed cost Indexed gain Issuer sponsored Losses used to offset gain Manual selection Maximise accelerate gains Mandatory Corporate Actions Method or CGT method Minimise defer gains Net Tangible Asset Non CGT gain loss Non discounted gain Non renounceable rights Off market transfer Optimisation Other gain Par Participating Preference Shares Partly paid shares The transfer of an underlying investment from one wrap to another where there is a
21. ged The tax date for the bonus shares is the tax date of the original parcel they are derived from Where there are multiple tax parcels the bonus shares are apportioned across the parcels on a pro rata basis Float IPO Tax Tools uses pre listing codes to enable customers to record participation in floats As a rule the pre listing code is the proposed ASX code with a suffix of ZZ The issue price is recorded against the pre listing code A code change is created transferring the quantity and cost base across from the ZZ code to the actual ASX code the day before the stock lists Rights issue The rights entitlement is generated as at the ex date of the offer and is recorded on a rights code created for that company The code is usually the ASX code followed by R for a renounceable offer and _R for a non renounceable offer unless otherwise specified The entitlement is created on a pro rata basis with fractions being disregarded rounded up or rounded to the nearest share as specified by the company The entitlement code is created with zero cost However the offer price is recorded in the database so that when the rights are taken up the total amount payable is calculated based on the number of rights taken up This dollar amount then becomes the cost base of the new securities which are recorded on a temporary code usually the ASX code followed by N or _N for non renounceable offers until the
22. he issuing company at the time of issue usually 100 A share with a claim to profits ahead of ordinary shares These shares may also have access to any additional dividends to be paid after ordinary shareholders have received theirs Shares which have been issued with only part of their par value paid e g shares may be issued with a par value of 1 00 of which only 50 cents has been paid with a further 50 cents still owing Was SC george Personal assets Portfolio list Portfolio type Pre offset gain Preference shares Process from date Realised gain Recalculate to Record date Redeemable preference shares Renounceable rights Rights issue Security holder reference number SRN Stapled securities Starting Position Status Subordinated debt Tax credit Tax date Tax deferred distribution Tax exempt Tax Parcel Means assets other than shares held through us which need to be created by you in the system All pricing income and any related adjustments to your Personal Assets are maintained by you The details you provide for these assets are included in all the Tax Tools Premium reports Personal assets can include rental properties cash books artwork a wine collection managed funds and traditional securities such as bank bills term deposits and fixed interest securities This is Tax Tools main screen and lists all the portfolios that the user has access to The tax type
23. holdings as it is known at the time The outcome of these calculations does not take into account your personal circumstances No part of this user guide should under any circumstances be construed or taken as tax advice It is designed to be a functional description of the Tax Tools product only Because we do not provide advice and the reports both printable and on screen produced by Tax Tools Plus and Premium have not been designed to constitute advice we recommend you obtain professional tax advice before you using Plus or Premium reports or information including this guide to make investment or tax decisions Holdings transferred to your account from another broker will not have the cost base and potentially the parcel split recorded in our systems With Plus and Premium you can manually add this information to ensure it is included along with your other holdings You need to be very careful in undertaking such manual input as you will be responsible for the accuracy of that data You can only use the reports if you are an Australian resident for tax purposes The calculations including tax rates are based on your tax type To determine your tax type we rely on your directshares account type For shares sold before 30 June 2008 we use a first in first out close out strategy to calculate capital gains For sell trades placed after 30 June 2008 we use a minimised gains close out strategy These strategies may not be th
24. nvestment plan DRP Employee share plan ESP Equity warrants Ex dividend date Exchange traded option ETO Expiry expiry date or expiration First in first out FIFO Fixed income investment Franked dividend Franking credit Gain gross or nominal Global asset Holder identification number HIN Holding statement The adjusted purchase price of an asset as defined for CGT purposes An organisation that holds but doesn t own assets on behalf of other people A settlement in which the obligation to settle on a trade date plus three business days T 3 basis is deferred until the time following the dispatch date that ASX fixes One of the two types of capital gain which can be chosen for the disposal of assets acquired before 21 September 1999 and the only type available for assets acquired after that date provided that the assets concerned have been held for at least 12 months The gain is subject to a discount for tax calculation purposes according to the tax regime they are held under For individuals the gain is discounted by 50 Money or its equivalent paid by a trustee to a beneficiary of the trust The tax credits passed on to a shareholder who receives a franked dividend Under provisions of the Income Tax Assessment Act franking credits entitle investors to a rebate for tax already paid by an Australian company DRP is where the shareholder elects to receive new shares in lieu of cash fo
25. option is a contract between two parties which gives the taker buyer the right to buy or sell a security at a pre determined price known as the exercise price on or before a predetermined day known as the expiry day The expiry day is usually the last Thursday in the expiry month The standard number of shares in one option contract on the ASX is 1 000 however this can change due to adjustment events such as new issues or a reorganisation of capital in the underlying share Option writers earn a premium for selling options The premiums change according to a range of factors such as the price of the underlying share and the time left to expire on the Option Brokerage and ASX fees also apply to Option transactions The following picture shows the parties involved in an ETO contract Trade flow in Tax Tools The following picture shows the normal trade flow in Tax Tools Options Trade Delivery Trade Closing Trade Buy Opt To Write Opt To Open Close Write Opt To Buy Opt To Open Close AL SC george Viewing write take up Options You can view the write and take up of Options using the Trading Activity gt Options gt Write Take Options screen The fields on this screen are described in the following table Field Description Type The type of transaction Security The security code for the option Date The transaction date Quantity The number of contracts being bought or sold Total amount
26. ou next recalculate the portfolio For example Previous login time 30 Mar 2010 10 38 Manual Parcel Selection For Disposals Oty Sold Stock Being Sold Sale Date Sale Proceeds TMA GROUP OF COMPANIES LIMITED ORD 240 000 TMA FULLY PAID 4 01 2010 7 658 05 240 000 shares units remain to be allocated lt lt lt Previous N ext gt Purchase Tax Date Date Lot Nbr Cost 1412 2006 82 2009 400 000 243 661 59 Quantity Sale Qty lt lt lt Previous Next gt gt gt This screen allows you to nominate units sold against purchase lots in order to achieve your specific CGT goals The Check Quantities button allows you to check that all the sold units have been allocated Was SC george Maximise Accelerate gains Tax Tools will choose the parcels that result in the highest net taxable gain for the portfolio This maximises the amount of CGT payable in the financial year Changing the disposal allocation method Although Tax Tools is designed to minimalise a portfolio s CGT liability when moving forward for the current tax year the system relies on the correct tax parcels being available for disposal There is a function within Tax Tools that allows you to apply a bulk change to the disposal allocation method for all transactions within a specified date range You can also change each sell transaction manually To change the disposal method for all transactions within a date range 1 From Trading Activity
27. pplies tax implications of mandatory corporate actions to your portfolio As per Standard Subscription service An interactive subscription service with a range of reports and features to manage your CGT as well as the ability to collate many of your assets in one place e Very active investors Day traders Investors with large portfolios e Investors with other asset classes As per Plus Allows management and therefore better control of your wider CGT liability As per Plus 14 in depth reports e Ability to add other Asset classes that incur CGT e g Property Cash and Collectables held outside your directshares portfolio As per Standard The ability to report on the other asset classes that incur GST e g Property Cash and Collectables held outside your directshares portfolio Subscription service Was SC george COST BASED CALCULATIONS WILL ONLY BE MADE ON SECURITIES BOUGHT VIA directshares TRADING PLATFORM With Tax Tools Plus amp Premium please remember This document is intended to be a description of how Tax Tools Plus amp Premium functions Plus and Premium use pre defined algorithms to calculate tax liability based on current Australian Tax Legislation as it is understood by Praemium Pty Ltd and for the assets held within a portfolio at a given time In addition it attributes the effect of corporate actions data as supplied by third parties to those
28. r dividends distributed by those companies which offer a DRP The tax date for shares received is the payment date of the dividend These shares are often issued at a discount and no brokerage is paid A scheme established by an employer to provide tax advantaged share ownership for its employees as part of their remuneration packages If such shares are issued at a discount price the value of the discount is assessable for tax purposes at the time of issue Equity call and put warrants are issued over securities such as shares in companies Four business days before the company s Record Date To be entitled to a dividend a shareholder must have purchased shares before the ex dividend date A contract between two parties which gives the taker buyer the right to buy or sell a security at a pre determined price known as the exercise price on or before a predetermined day known as the expiry day The date on which all unexercised options or warrants in a particular series expire The process of allocating sale parcels against the oldest buy parcels for CGT purposes i e first bought first sold An investment that pays a fixed amount of interest such as bonds and other debt based instruments and repays the principal amount on maturity These are generally not subject to CGT but assessable for income tax in the year they produce income A dividend paid by a company out of profits on which the company has already paid tax The inv
29. rcels acquired on or before 19 September 1985 which are preserved as they are not subject to current CGT legislation Tax Tools optimises CGT for your portfolio by following the three stage process described below Disposal method selection Tax Tools allows you to set the preferred CGT disposal method for your portfolio by applying a Disposal Allocation Method The default is set to Minimise Defer Gains for all transactions from 1 July 2008 and you do not need to do anything if this is your preferred method The default disposal allocation method for transactions prior to this is First In First Out FIFO To change the default allocation method for specific transactions refer to Disposal allocation methods on page 8 Tax Tools automatically creates discreet tax parcels from your transactions as you trade and updates them based on corporate action activity known to Tax Tools This allows the tax engine to select parcels for allocation against disposals to suit your selected disposal method When disposing of a parcel acquired prior to 21 September 1999 there is a choice between the discount method and the indexed method for calculating any capital gain Tax Tools calculates the gains and losses according to your selected disposal method and taking into consideration the net gain loss position for that financial year Splitting tax parcels In addition where there are pre 19 September 1999 parcels which have been indexed Tax Tool
30. rticipate in the corporate action If the shareholder does not respond to the issuer of the shares in relation to the corporate action within the nominated timeframe the shareholder may not be able to participate Tax Tools treat mandatory corporate actions which give shareholders a choice between two or more alternative options for example some take overs or dividends as voluntary corporate actions Was SC george
31. s will allocate tax parcels against sell transactions by splitting the parcels in the most effective manner for your selected method Loss optimisation Sometimes portfolios make some trading losses or have carried forward capital losses that can be used to offset gains Tax Tools has two techniques to ensure the most value for each dollar of loss where the default method is used 1 Tax Tools will offset losses against gains with no CGT concession first if they are available i e parcels that have been held for 1 year or less This is to ensure CGT gain parcels that are eligible for CGT concessions are retained for use at a later date or to use against losses if no non CGT concession parcels are available 2 Where both discounted and non discounted indexed gains have been made Tax Tools will switch methods on individual disposals if it is more advantageous to use the higher non discounted gain as it may use less dollars of loss It will do this by splitting the tax parcel to use the loss and then applying the chosen Disposal Allocation Method for that transaction to any remaining units in split parcels This optimisation process occurs during every recalculation of the portfolio taking into account any new information that has been added to the portfolio since the previous rebuild Pre CGT parcels will be isolated and protected from being sold in the portfolio Was SC george Sell AMP Disposal allocation methods AMP LT
32. split e share consolidation e in specie distribution e in specie dividend e name and or code change e spin off demerger e merger e takeover e bonus issue e float IPO e rights issue e pro rata entitlement offer e free attaching options shares e call payment e off market buyback e stapling and e destapling This section describes how Tax Tools processes each corporate action Return of capital The cost base is reduced by the capital returned amount The effective date is the ex entitlement date for the Return of Capital and the settlement date used is the actual payment date During the period after the ex date and before the payment date the capital returned amount appears as an Unsettled Amount in the Portfolio Valuation by Security report Share split The number of shares units held is increased as per the ratio specified by the company for example 1 000 shares are increased to 4 000 shares for a 1 4 split The original cost base is apportioned across the new quantity of units and thus the original cost per unit is reduced proportionately The original tax dates are retained Share consolidation The number of shares units held is reduced as per the ratio specified by the company for example 1 000 shares are reduced to 250 shares for a 4 1 consolidation The original cost base is apportioned across the new quantity of units and thus the original cost per unit is increased proportionately The original t
33. ss is calculated for CGT This can be indexed or discounted or neither if the asset has been held for less than 12 months The choice is defined by certain tax rules and dates of trading The process of allocating sales to buy parcels to minimise the taxable gain This is the most beneficial method and is the default for the Tax Tools system calculation Calculated as the total assets of a company minus any intangible assets such as goodwill patents and trademarks less all liabilities and the par value of preferred stock Also known as net asset value or book value A nominal gain which is not subject to CGT This is usually a gain loss for an income instrument such as a term deposit where income tax rules apply A CGT gain that has been calculated by a method other than discounting A rights offer that may only be taken up or forfeited and cannot be traded on the market The transfer of shares between parties without going through the market place Off market transfers are executed through the use of an Off Market Transfer Form which is available on the website under Forms and Applications mini tab within the My Accounts tab A numerical process that calculates the most beneficial after tax return on the realised gains losses on disposals A gain which is neither discounted nor indexed usually because it has been held for less than 12 months The nominal or stated value of a stock or bond set by t
34. ty taken up Date The date the rights offer was taken up Additional cost This is the application money paid You can view the updated transaction in the Transaction History screen Was SC george CONVERTING NOTES AND PREFERENCE SHARES A convertible note is described by the ATO as a type of investment you can make in a company or unit trust A convertible note earns interest on the amount you pay to acquire the note until the note s expiry date On expiry of the note you can either ask for the return of the money paid or convert that amount to acquire new shares or units For more information refer to the ATO website http www ato gov au In Tax Tools convertible notes and converting preference shares which mandatorily convert into shares will be automatically redeemed at conversion date For those which are not mandatorily converted Tax Tools will treat your note as not converted until you choose to exercise any applicable options Viewing convertible notes or preference shares From e Trading Activity gt Convert Notes click Convert Notes Single Portfolio or Trading Activity gt Convert Preference Shares click Convert Preference Shares Single Portfolio The following fields display Field Description Exercise against This is the default option for taking up preference shares notes Security The security code for the notes or shares Qty taken The quantity of shares converted Date The
35. urn lt lt lt Previous Next gt gt gt Start of Financial Year Carried Forward Losses Delete 1 07 2009 1 000 00 lt lt lt Previous Next gt gt gt The Realised Gains report displays this amount Hide CGT Summary Expor to Excel _ Summary Realised Gains Carried Forward Losses Losses Generated in Period Total Losses Available to be offset 1 000 1 000 Pre Offset Gain Losses Used to Offset After Offset Gain Non Discounted Gain 1 200 1 000 200 Indexed Gain Discounted Gain Net Gain 200 lt lt lt Previous Next gt gt gt Non CGT Security Sale Quantity Open Amount Adjusted Cost Close Amount CGT Gain Losses Tax Date OpenDate Close Date Indexed Cost Gain Loss Gross Gain OtherGain HC TD 20 000 20 000 00 20 000 00 20 000 00 0 0 16 10 2008 16 10 2008 12 07 2009 20 000 00 0 0 0 100 000 100 000 00 100 000 00 106 000 00 0 0 16 10 2008 16 10 2008 16 10 2009 100 000 00 6 000 00 0 so WOW 5 000 151 400 00 5151 40000 152 600 00 1 200 00 0 20 08 2009 20 08 2009 19 10 2009 151 400 00 0 1 200 00 1 200 00 0 0 1 000 00 0 1 000 00 1 07 2009 1 07 2009 1 07 2009 0 0 0 0 lt lt lt Previous Next gt gt gt Was SC george CORPORATE ACTION TYPES As part of your portfolio s overnight recalculation Tax Tools automatically processes the following mandatory corporate actions where they are relevant to any of your holdings e return of capital e share
36. ying securities which make tax reporting accurate and transparent since tax dates tax components and cost bases may differ between the underlying stapled stocks When a non stapled security is stapled to one or more stocks to create a new stapled security on the ASX Tax Tools generates corporate actions to create the new stapled security The existing shares units are transferred to a temporary deferred settlement code and then to the new ASX code in order to bring across the correct number of units tax dates and cost base calculations The new stapled security is created within Tax Tools including the underlying securities in order to be able to attribute correct tax dates and cost bases based on the NTAs as specified by the company Was SC george Destapling The existing shares units are split into the new securities with the cost base being apportioned between the new codes as specified by the company Rollover relief will usually apply unless otherwise stated by the company AL SC george EXCHANGE TRADED OPTIONS IN TAX TOOLS ETOs This section describes how Tax Tools handles trades for exchange traded options ETOs Tax Tools allows you to trade and value ETOs and calculate any capital gains tax consequences of buying writing and exercising options When you trade ETOs at directshares the transactions are automatically added to Tax Tools as part of the overnight processing What is an Option An
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