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Article 276: How to record Stapled Securities |
| Article Description |
Stapled securities include multiple investments but are traded as a single security. |
| Article Location(s) |
Simple Fund: How Do I / How to
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| Article Addition Added |
06/02/06 |
| Article Last Updated |
03/10/08 |
| Software Version |
Simple Fund 11.1 |
Article Solution |
Stapled securities include multiple investments but are only traded as a single security.
The simplest way to record these in Simple Fund is to record as one investment only, either as a Share, Managed Fund or Unit Trust, but with one single distribution income account which is used to record all the income components. Do not use a dividend income account, since tax components from the trust component cannot be correctly recorded to dividend accounts.
The dividend component of the stapled security will be picked up by Simple Fund when you input franked, unfranked and imputed credits from the transaction screen. These will end up in the Income Tax Return Labels D, J and K. If you record an imputed credit, but do not record anything in franked or unfranked, the imputation credit will end up in Label X Trust Distributions.
2008 Financial Year
For 2008 onwards all income received from stapled securities should go to label M Trust Distributions as per ATO SMSF Annual Return Instructions. All income for stapled securities should be recorded to a Distribution account.
2007 and prior financial years
Recording the stapled security as two investments
Simple Fund investment accounts can only have one linked income account. Should you set up an additional income account, this won't be linked to the investment account, and will not display on the Investment Income Report and will not be included as 'exempt pension income' in Pension funds.
Should you wish to have two income accounts (not the recommended option), then you must have two investment accounts.
Example
Investment ABC Stapled Security comprises of ABC Company Ltd and ABC Unit Trust.
Option 1: Record the stapled security to a single account under Units in Listed Unit Trusts (account 782/XXX), which creates a distribution account (account 238/XXX). Record all income components to this account.
Option 2: Record the stapled security to two separate accounts, one under Shares in Listed Companies and another under Units in Listed Unit Trusts. Record the actual purchase to the first account, and record a second dummy purchase of units only to the second account, with no value. Now you have two linked income accounts, and you can record income to both a dividend income and a distribution income account.
For a comprehensive example, please refer to the Westfield Stapled Security article. |
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