Introduction
This article will guide you through processing Instalment Warrants manually.
There are a number of Data Feeds available that support Instalment Warrant transactions.
The article will guide you through the following:
- Loan set-up
- Instalment Warrant Acquisitions and Disposals
- Instalment Warrant Income & Expenses
- Instalment Warrant Reset
Loan Set-Up
A Custom Holding Account is to be created for each instalment warrant.
Generally, the account will have the following GL, Tax Return, Capital Gain and Market Type classifications:
Use the Linked to Holding Account field to search and link the loan account to the Instalment Warrant.
Instalment Warrant Acquisitions
Purchasing an Instalment Warrant
Navigate to Fund Level > Transactions > Investment - Buy > Listed Security Acquisition
Instalment Warrants can be purchased in two ways, either through the Primary (float, rights issue, etc) or Secondary markets (through ASX). Either way, the Listed Security Acquisition business event will be utilised to acquire the instalment warrant purchase.
Instalment Warrant Income
Listed Securities
The Generate Income button To process instalment warrant income such as dividends and distributions Generate Income button can be used
Use the Generate Income button once you have first processed all instalment warrant acquisitions and disposal for the income year.
Reset of Instalment Warrant
Navigate to Fund Level > Transactions > Instalment Warrants > Instalment Warrant Reset
Typically a warrant will have an Annual Reset Date. At this time, the loan amount is revised either upwards or downwards depending on the movement in the underlying share price, and interest and borrowing fees for the next 12 months are payable. This may result in the investor either being entitled to receive a payment or having to make a payment to maintain their full holding of Instalment Warrants.
- Select the Investment Account, being the investment of the instalment warrant.
- Enter Contract Date, the date at which the date reset takes place.
- Enter Settlement Date, the date on which the reset is settled.
- Enter Participating Quantity, the investment warrants holding quantity that the reset amount has been based on.
- Enter Cash Amount Paid (Received), which is any amount paid or received in relation to the reset. Enter amount received as negative. Non mandatory field.
- Enter Put Options Loss, which is the amount of any loss made on the put option associated with the reset of the instalment warrant. Non mandatory field.
- Enter Deductible Interest, which is the amount of any interest deduction to be claimed. Non mandatory field.
- Enter Change in Book Cost, which is the change of the book cost of the Instalment Warrant.
- Enter Description, or use the Class default "Instalment Warrant Reset".
Completion of Instalment Warrant
Navigate to Fund Level > Transactions >Instalment Warrants > Instalment Warrant Completion
When an investor makes the completion payment, the investor no longer holds units in the Instalment Warrant, but instead hold units in the underlying security. To process an Instalment warrant Completion:
- Select the Investment Account, being the investment of the instalment warrant.
- Enter Source Quantity, being the investment warrants holding quantity that the completion payment amount has been based on.
- Enter Contract Date, the date at which the date the completion takes place.
- Enter Settlement Date, the date on which the transfer of the underlying security is effective.
- Select Target Investment Account, being the holding account for the new shares.
- Enter Target Quantity, being the number of new shares received in the Target Investment Account.
- Enter Excise Payment, being the amount of the completion payment required to repay the loan and allow transfer of ownership of the underlying security. Non mandatory field.
- Enter CGT Date, being the date the new parcel of shares in the Target Investment Account.
- Enter Source Book Cost, being the book cost of the Instalment Warrant to transfer to the Target Investment Account. Non mandatory field.
- Enter Put Option Loss, being the amount of any loss made on the put option associated with the Instalment Warrant. Non mandatory field.
- Enter Deductible Interest, being the amount of any interest deduction to be claimed. Non mandatory field.
- Enter Total Cost of New Shares, being the cost base of the Target Investment Account.
- Enter Description, or use the Class default "Instalment Warrant Completion".
Sale or Expiry of an Instalment Warrant
Navigate to Fund Level > Transactions > Instalment Warrants > Instalment Warrant Sale
Investors can sell their Instalment Warrants on the ASX. Further to this, Instalment Warrants can expire if an investor does not make the necessary payments to keep the Instalment Warrant continuing. To process an Instalment Warrant Sale:
- Select Source Warrant, this is the holding account of the instalment warrant being sold.
- Enter Contract Date, this is the effective date at which the sale takes place.
- Enter Settlement Date, the date on which the sale is settled.
- Enter Total Units, this is the investment warrant's holding quantity that is being sold. Non mandatory field.
- Enter the Consideration, this is the gross amount received in relation to the sale. Non mandatory field.
- Enter Total Transaction Cost, this is the gross brokerage paid for the sale. Non mandatory field.
- Enter Total GST, this is the GST on brokerage paid for the sale. Non mandatory field.
- Claimable Input Tax Credits, this automatically calculate as 75% of Total GST where the fund is registered for GST.
- Enter Put Options Loss, the amount of any loss made on the put option associated with the sale of the instalment warrant. Non mandatory field.
- Enter Deductible Interest, the amount of any interest deduction to be claimed. Non mandatory field.
- Cash Account, this automatically populated based on the Consideration less the Total Transaction Cost
- Enter Description, or use the Class default "Instalment Warrant Sale".