Why doesn't Class currently support Tax Statements for securities linked to a Wrap/Platform? What about brokers?
Wrap/Platform providers use a custodian arrangement and an omnibus solution that enables them to issue tax statements directly to the investors. They may apply ratios using methodology different to investors who held the managed funds or listed trusts directly.
For investments that are held through a Wrap or Platform account, the Tax Statement automation will be supported through the normal data feed. We are looking to improve both the coverage and reliability of this data on a provider by provider basis. Keep an eye on our regular release notes for further updates.
For investments that are held through broker accounts, e.g. CommSec, BellDirect, Tax Statement automation is supported through the Class tax statement template.
If I have investments held through a wrap/platform account but the feed is not yet activated, or there is no Tax Statement data feed for this wrap/platform account, can I use the Tax Statement automation in Class?
Yes, but with caution.
Wrap/platform providers use a custodian arrangement and an omnibus solution that enables them to issue Tax Statements directly to the investors. They may apply ratios using methodology different to investors who held the managed funds or listed trusts directly.
We strongly recommend that you review the tax statement templates generated by Class carefully against the actual statement supplied the wrap/platform provider, and make any adjustments where necessary.
If you choose to use Tax Statement automation, the following steps are recommended:
- Temporarily change the product type of the data feed to 'directly held' via the feed console, or unlink the relevant investment account from the data feed
- Resubmit the relevant distribution income events (edit/resubmit)
- Generate the tax statements through tax statement console
- Compare with the actual report
- Change the data feed product back to the original type, or relink the investment to the data feed.
To ensure minimum disruption on the data feed, you MUST complete all the steps above within the same day.
What securities does the Tax Statement Console cover?
Class supports most of the commonly held securities, including listed trusts, ETFs, stapled securities and managed funds.
Refer to our User Guide page on Tax Statement Console for more details.
What do I do for a security held that isn't supported in the console?
We have an established process whereby you can provide our data research team with sample tax statements, and we can then derive the ratios and make those available for all Class customers.
You can also manually enter data.
Does Class support Tax Statement Templates before 2018?
Class has collected tax statement templates from the 2015 financial year onwards. The Excel Transaction Loader must be used to for 2015, 2016 and 2017 Tax Statement Template ratios. Tax Statement automation in the Class application directly, is supported from 2017/18 financial year onward.
Why do some holdings that require Tax Statements not appear in the Tax Statement Console?
If holdings are linked to a wrap/platform account (e.g. BT Wrap), then Tax Statements for these holdings will not show on the Tax Statement Console. In this case, either the wrap/platform feeds provider will send the Tax Statement data (if applicable) directly or the Tax Statement will need to be manually entered using the Distribution Tax Statement event.
What happens to Tax Statements that I currently receive through a data feed? Will I still get these?
Yes, you will, the process hasn’t changed.
Can I process Tax Statements at Business Level?
Not at this stage. As Class' automated Tax Statement solution is based on the distribution events already generated in Class, it is necessary to process this on a fund by fund basis.
However, you can process multiple Tax Statements in bulk through the Tax Statement Console.
How long after the end of the financial year will the tax statement templates become available?
This depends on when the tax statement data is made available to Class. For ASX listed securities, we are aiming to provide the templates between July and September, but for managed funds, we expect it will be available between July and December.
For listed securities, the standard turnaround time is two weeks once the Tax Statements are released by the share registries. Managed Funds generally will take longer.
Class relies on the co-operation of the data providers, fund managers, and most importantly Class users. Class prioritises the Tax Statement Templates based on information availability and how widely held these securities are within our client base.
If you would like a new Tax Statement Template to be made available and have all the required information ready, you can lodge a Tax Statement Template request.
Will Class still support the Excel Transaction Loader?
Yes, this is still currently supported. However, the transactions generated by the loader will be for the old distribution tax statement event.
Can I change the effective date of the Tax Statement?
Yes, by default Class will use 30 June of the financial year. If the asset is fully disposed of prior to 30 June, you should update the Effective Date field of the Annual Tax Statement event to be on or before the disposal date.
How should I be processing the pro-rata distribution statement, especially for funds that switch between deemed segregated and unsegregated methods in the same financial year?
To pro-rata the components on the basis of per distribution on the Annual Tax Statement event, next to the Effective Date, tick the Use Distribution Date checkbox. The Tax Statement Console will pro-rata the Tax Statement for you automatically, i.e. split the Tax Statement component to each distribution. You may refer to the Per Distribution tab to see the component breakdown.
Can I delete the Annual Tax Statement once it's been generated?
At this stage, you can't delete the Annual Tax Statement but you can reset the event status to incomplete or enter with the updated information.
Does Tax Statement automation work for securities that have unit movements? For example, if the investment is bought or sold part way through the year?
There are three types of Tax Statement Templates available:
- Constant - the underlying tax statement component is the same for all the distributions paid during the year. Class will automatically apply the template regardless of unit movement.
- Varying - the underlying tax statement component is different for each distribution. The tax statement template for this type will not be affected by unit movements and will be applied even though the units are not uniform. The accounting date in the distribution event is required to match with the ex-date of the distribution announcement data.
- Aggregated - the tax statement component is aggregated to reflect all the distributions for the period. The template will only be applied if there is no unit movement on the ex-date of the distribution announcements.
To confirm the Tax Statement template type,refer to the 2019 Tax Statement Template page.
Our analysis indicates that most SMSFs hold listed trusts and managed funds for long term investment purposes, with around 65% of funds not buying or selling units through a given financial year.
When the Tax Statement ratio type is Aggregated, and the units are not uniform on the income entitlement date, e.g. DRP, then Class will flag it as manual and you need to process the Tax Statement manually.
For investments with status the 'Manual Tax Statement', does that just mean Class does not have the automation for it and it relies on the administrator to enter the components?
The "Manual Tax Statement" status under the Status column could mean one of the following:
- the Tax Statement Template is not available and requires users to process the Tax Statement manually
- the Tax Statement Template type is varying and the system can't find a matching Tax Statement Template to generate from due to the accounting date of the distribution event and the date of the income announcement not matching (Class currently allows + or - 5 days of tolerance). This can happen if the distribution is processed manually using the payment date. To apply the Tax Statement Template, you may change the accounting date of the distribution to match with the ex-date of the income announcement
- the Tax Statement Template type is aggregated and there is unit movement on the ex-date of the income announcement.
Most Tax Statement capital gains need to be recalculated at the SMSF rate as opposed to an individual rate. Does the new template support the correct capital gain calculation so I don’t have to manually change the capital gains for SMSFs?
The short answer is "Yes".
Most Tax Statements are prepared based on the assumption that the investor is an individual. The Tax Statement Template is prepared in such a way to ensure the grossed-up amount in the template matches with the Tax Statement issued.
From a data entry perspective, Class makes a default assumption that a 50% discounted value for the "Discounted Capital Gain Domestic/Foreign" fields has been used. The 50% discount amount is what is provided on the vast majority of Tax Statements, usually as CGT concession amount, even when the provider knows that the investor is an SMSF.
Based on this assumption the Calculation function on the 'Grossed Up Capital Gains Discount Method' now applies the following formula:
(Discounted Capital Gain Domestic + Discounted Capital Gain Foreign) x 2.
Class will then apply 1/3 discount to the amount displayed under "Grossed Up Capital Gains Discount Method". This calculation will be reflected in the Tax Summary section of the Realised Capital Gains report, as well as in the SMSF Annual Return.
How will Class deal with distributions like Platinum International Fund that have foreign tax credits on capital gains income? Do we just ignore them?
Class Tax Statement Template currently adopts the following methodology to support foreign tax credits attached to foreign capital gains:
- Record the Total Foreign Income Tax Offsets (including the portion from foreign capital gains) in the Tax Credit field under foreign income. This ensures that the total foreign income tax offset is captured in the Tax Statement event.
- Reduce the Foreign Income by the amount of the Foreign Tax Credit attached to the capital gains. This ensures that the gross taxable foreign Income (i.e. net foreign income plus foreign tax credits) reports on the SMSF annual return agrees with the Tax Statement.
- Record the Gross Taxable Amount for Capital Gain derived from the foreign asset. The amount reduced from foreign income is added back to the foreign capital gain to make sure the cash is reconciled. This also ensures that the Grossed-Up Capital Gain (Discount Method) is automatically calculated by times 2.
Why is the Class Tax Statement Template based on data using the attribution column, rather than the cash column?
It's most important that the taxable amount, i.e. attribution amount, matches with the statement. Once all the attribution amount is recorded, if there is a difference between cash and the net distribution in Tax Statement, Class uses the Tax Exempted Amount to record the balancing adjustment. This field allows either a positive or negative amount which can be used to ensure the taxable distribution and cash distribution is always fully reconciled. The AMIT amount often manifests itself as the equal value but opposite sign to the tax exempted amount.
Are stapled securities, such as Transurban Group (TCL) supported by automatic tax statements?
The Tax Statement Template in Class will automatically factor in the accrued distribution that is paid in the next financial year. However, from the distribution cash processing perspective, you will need to manually split the June distribution component to exclude the dividend component, then process the dividend component as a separate dividend event, which will be included in the next financial year based on the dividend payment date.
If you would like to use the Class Tax Statement Templates for stapled securities, refer to Class' s assumption and recommended approach for securities such as TCL in knowledge article, FAQ: Stapled Security Income Split.
For Tax Statement 2019, we aim to improve the income generation functionalities for stapled securities, to handle the dividend and distribution split automatically.
Does the Class Tax Statement automation support the AMIT components, i.e. cost base excess or shortfall?
Yes. AMIT is always supported as part of the Tax Statement automation.
Can I still use the normal "Distribution - Tax Statement" event to process the tax statement?
Yes, the "Distribution - Tax Statement" event can still be used by
Navigate to Fund Level > Transactions > Fund Income > Distribution - Tax Statement
If I have processed the 2018 financial year Tax Statement for an investment but still would like to apply the Class Tax Statement Template, what do I do?
You can click Convert that sits at the menu icon on the right-hand side for the investment for which you want to apply the Class Tax Statement Template. This will effectively wipe out the Tax Statement that you’ve processed and allows you to generate the Tax Statement event using the Class template.