Certain costs of an investment should counts towards the cost base of the investment. How can I achieve this in Class?
ITAA 1997 Section 110.25(4) allows certain costs to be added to the cost base (if acquired after 20 August 1991) … "third element" of cost base …. Eg interest on money borrowed to acquire, costs of maintenance/repair, rates and land tax.
Section 110.45 ITAA 1997 prevents some expenses from being included in the cost base (for assets acquired after 13 May 1997). Specifically, (1B) cuts out expenses from above “to the extent that you have or can deduct it”.
- While Class does not categorise the cost base separately, according to the five elements, they are recorded as one total amount.
- Class allows you to capitalise an expense.
- Class doesn't capitalise one payment as part cost base and part expense.
The following workaround can be used to allocate payment as part cost base and part expense.
Step 1: Cash out Transaction
- Calculate the amount which will be allocated to the cost base
- Process the balance as an expense
Step 2: Process the expense balance
Navigate to Fund Level >Transactions > Fund Expense > General Investment Expense
- Select the relevant expense type
Step 3: Process the Cost Base
Navigate to Fund Level >Transactions > Investment – buy > Property Capital Improvement
Step 4: Match the transactions
- Match the two Business Events
- Match the one line Business Event with Cash out transaction
- The first step normally is the difficult step, as the actuarial percentage is only available after running the 30 June Period Update.
- To simplify the process, take up the cash out transaction fully as an expense at Step 1. After applying the actuarial percentage, follow the above steps again. This action will not change the actuarial percentage, as it is only a profit change, not a member transaction.