Xero guides - Managed Fund Statements (part 1)

Heh all. AMIT statements are a major annual task when it comes to tax time. I currently have about 34 different holdings including ETF’s to listed managed funds and unlisted funds. All have year-end tax statements. Many have monthly payments with component splits estimated by Sharesight at the time. All need to be reallocated to the correct splits per the tax statements at year end.

These are held in different portfolios (including SMSF’s) so getting it all right is a big job. To add further complexity, a number of the portfolios are linked to Xero.

My experience is that the AMMA/AMIT statements come in many different forms with different manager treating different components in different ways. Errors are common. Some are not received until well into October

Through all this I’ve found Sharesight to be excellent in recording everything correctly. Sadly (mostly due to the managers) it’s not a one-size-fits-all process working through it all. The biggest pain are the AMIT cost base adjustments.

I did have to do a bit of heavy lifting a year or so back to understand how to process everything - but based on the excellent Sharesight help articles (and a bit of process mapping from my side) it all now works smoothly.

Here are some hints that work for me at interpreting the tax statements. You need to have a good handle on this before moving to the Xero process.

1. Ignore the Tax return (Part A) section. Focus on the components

While these fit well into the tax return they do not cover all the components (esp case base ajustments). All the info you need is in the ‘Components of Distribution’ (Part B) section.

SS will reallocate the cash received on the holding to the correct tax component so focus on the totals in the ‘cash distribution column’ (and the tax paid usually in the middle). All numbers to go into the SS reallocation table should be put as positive numbers.

2. Check the total first
Make sure the Net Cash Distribution total on the tax statement agrees to the total on the taxable income Report for the holding (which must be in the ‘Trust Income’ Section). Differences usually relate to payments made in July that relate to the previous year. Ensure the ex date on the payment in SS is set to 1 July for july payments. SS will then count it in the June year end income.

3. Watch out for split post year end payments for unlisted funds
Some unlisted funds will have part of a July (or even Aug) payment that will relate to the prior FY and some to the current. In such cases you will need to go back and split that payment to the prior year portion (with a 1 July ex date) and the next FY portion

Looking at the statement - and reallocating using the ‘enter annual tax statement components’…

4. Put all the ‘Australian income / non-primary production income’ into unfranked income
In (almost) every case I’ve seen the cash and attributable columns are the same. Just put the total into the ‘unfranked’ box on the SS reallocation table. I never use the interest box. If there is any tax showing as paid in the middle column (likely TFN WHT), put it into the correct tax box in SS (likely the TFN withholding tax)

5. Franked Dividends
Put the cash paid (in first column) into the franked div box and the tax paid (in the middle column on the statement) in the franking credits box in the SS reallocation table.

6. Capital gains - Most splits can be ignored.
Managers report gains in a range of ways (and needless to say the ATO has enough categories to confuse even the best of us!).

Put the Net capital gain total from the cash column into the ‘discounted capital gains’. I generally ignore the ‘discounted capital gains’ and ‘capital gains’ split. The important thing is to ensure the grossed up portion of the capital gain is shown correctly.

The ‘other capital gains distribution’ is generally the discount portion if the capital gain (and will agree to the total on the 3rd column) so put that amount in the CGT concession box in the SS reallocation table. If it doesn’t agree then work backwards by elimination to work out where the amount goes

7. Foreign income
Put the total from the right hand column in the Foreign Source Income box on the SS reallocation table. The tax paid/offset (from the middle column) goes in the Foreign Income Tax in the SS reallocation table.

Cash (1st column) PLUS tax offset (2nd column) should equal tax attribution (3rd column). If they don’t then work backwards by elimination to work out where the amount goes (or if the manager has made an error)

8. ‘Other non-attributable amounts’ is usually the AMIT cost base adjustments so ignore it
Generally, ‘Other non-attributable amounts’ will equal the net of the AMIT cost base adjustments - being excess (decrease) MINUS shortfall (increase). So don’t put this amount into the SS reallocation table. If they don’t agree, work backwards again. Failing that, ask your accountant!

9. AMIT cost bases
Some managers report these as a net amount, others report both the increase and decrease. No idea why. Put the Excess (decrease) in the AMIT Decrease box, and Shortfall (increase) in the AMIT Increase box in the SS reallocation table.

10. Check the SS reallocation table recalculated total
The amount in the RHS of the top row ‘Totals’ should equal the Recalculated Net amount in the RHS bottom row. If it doesn’t agree I probably haven’t worked through each item in the cash column correctly in the tax statement.

The other option is the tax statement doesn’t add correctly - which actually does happen. I’ve usually been able to work out the problem and put the right numbers in from other info on the tax statement. It’s a process of elimination.

This likely won’t cover all the scenarios but hope it assists.

I will post a note on xero separately.