Hi all,
Thank you for your patience. I want to clarify Sharesight’s logic around these distributions and how we apply our logic to the Taxable Income Report.
Firstly with CGT components (and all components for that matter) ETF and fund investors will receive an end of year tax statement but we will always apply the components to each payment. We do this to ensure the correct and most accurate reporting for capital gains is displayed at any point during the financial year.
To address the concerns around how we split off the cost base components in particular: Sharesight splits these adjustments into each payment in the financial year as we believe this is the most accurate way to track your cost base throughout the year.
We base this on getting the most accurate capital gains on any potential sales that may occur throughout the year where the cost base would be adjusted. It should be noted that none of our component adjustments will affect the final dividend/income amount, this will always remain the same.
As an example:
- You own 100 units in a fund at the start of the FY and sold 90 units halfway through the year.
- Throughout the year you also receive quarterly payments.
- Adjusting the cost base at the end of the FY would lead to the cost base of the remaining 10 units based on the 100 units that you owned at the start of the FY.
As we split off the components, your CGT for the sale would have adjusted the cost base as each payment comes through. Firstly, this leads to more accurate CGT reporting on the sale. Secondly, the next two cost base adjustments would be more accurate as these would be based on the 10 units you continued to hold until the end of that FY.
Last financial year, we received and updated components for around 550 funds, with form checks being run regularly on all corporate actions in Sharesight. For these funds, we distribute the components across each applicable payment as per the logic above. This is accurate down to the cent through rounding methods used by Sharesight. Vanguard provides us with more detailed information on components per quarterly payment. We’re confident that we have accurate information being distributed across the report.
We acknowledge that we can make improvements to this report. The feedback shared has led to our team adding in labels on each component to fill out that matches the end of year statement. You can expect to see this from the week of March 7th.