I have already matched the cash event fully with the distribution income event. What should I do now?
Scenario 1: The distribution event was generated by an income announcement and has not been modified
- Unmatch this event from the cash transaction
- Click Generate Income by
Navigating to Fund level > Transactions > Match TransactionClass will update the distribution event and create a dividend event. You can click Automatch to match two business events with cash.
Scenario 2: The distribution event was generated by an income announcement but has been subsequently modified by the user.
- Delete the event
- Click Generate Income by
Navigating to Fund Level > Transactions > Match TransactionClass will create separate distribution and dividend events to match.
How does a data feed affect the income split?
- If the fund is receiving a bank feed, then click Generate Income. Class will automatically create a distribution event and dividend event to be matched.
- If the fund has set up a platform feed, when the cash transaction comes in it will trigger the income announcement. Class will process the split and match with the cash transaction.
- If the fund has set up broker feed, all the work will be done automatically (including DRP). You will only need to review the events.
- If the fund has no feeds set up, then click Generate Income. Class will automatically create separate distribution and dividend events.
Why does the split only happen for the June distribution, not the December distribution?
- The difficult part of processing stapled securities is the income announcement around the financial year boundaries. For tax purposes, the June announcement may include distribution income which should be included in the current financial year and dividend income to be included in the next financial year. Generally, for the December announcement, both the distribution and dividend are included in the current financial year, hence the split is not required.
- The Class tax statement ratio for these stapled securities will include the mid-year dividend component as part of the distribution for the financial year, including any franking credits attached to them.
How can I process a DRP for TCL or LLC?
There are only two stapled securities that have income announcements around the financial year boundary and have a DRP program:
- TCL (Transurban Group - Ordinary Shares/Units Fully Paid Triple Stapled)
- LLC (Lendlease Group - Unit/Ordinary Fully Paid Stapled Securities).
See below steps to take DRP in relation to a stapled security.
Using TCL as an example, a fund has 1,000 units of TCL as at 27 June 2019
Step 1 - Generate income
This will generate one distribution event with $280 and one dividend event with $20
Step 2 - Pick up the DRP in the Distribution event
- On the distribution event, tick the 'Includes Reinvest' checkbox
- Enter the dividend amount, in this example, $20. Also enter this amount in the Residual Adjustment field
- Once completed, the total available for reinvestment will show as $300 (which is the total distribution for June 30)
Click on 'Use this Announcement'. Class will use the reinvestment price and the total available reinvestment amount to calculate DRP and carried forward residual balance.
Step 3 - Match the $20 dividend income (shown on the credit side) and $20 residual adjustment event (shown on the debit side)
Navigating to Fund Level > Transactions > Match Transactions
Note that DRP is only entitled when payment is due, so in this example, the 19 units will be acquired on 9 August 2019.
Can I process Generate Income on the business level?
If the funds are getting broker feeds, Class will be able to generate the dividend and distribution automatically for these funds with these supported stapled securities. Since February 2020 Release, you can also generate income at the Business Level through the Cash Console.
Can I use Class tax statement automation for stapled security?
Yes, Class will support all stapled securities. Refer to our help page on 2019 Tax Statement Template to check the availability of the tax statement ratio.
I have already split the income manually, how does this affect me?
The purpose of the stapled security income split feature is to simplify the process and make it automated. If you have already split the income manually according to the payment advice and distribution tax statement, then no further action needs to be taken.
I didn't modify the June 2018 distribution, what should I do now?
You should refer to the page 2018 Tax Statement Processing for Stapled Securities. If the amount is material enough, then you may consider amending 2018 financials and the SMSF Annual Return.