AMIT regime for trust distributions

Hi,

Under the new AMIT framework (and many listed and unlisted entities are now adopting it) there is a change to the handling of what was previously referred to as tax-deferred amounts. It's now possible to have a total income figure which is either above or below the actual cash distribution with the difference between the two resolved by what is now refereed to as AMIT cost base adjustments. In the case of tax-deferred components, they now seem to get classified as a "AMIT cost base net amount - excess" which is used to adjust the cost base down. As far as I can see this is exactly what the tax deferred field in Sharesight does right now.

But it's also possible to have an income figure which exceeds the cash distribution and this is now referred to as "AMIT cost base net amount – shortfall" which requires an increase in the cost base for the holding (like a negative deferred tax amount).

As far as I am aware there is no provision in Sharesight's distribution component fields to handle this latter scenario. It would require the user to go back and manually adjust the cost base in the transaction history.

Has Sharesight looked into this issue?
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  • Hi Matthew,

    We haven't looked into this issue.

    I will take a closer look at this new component and post an update on this topic when I know a little more.
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  • Sure. Let me know if you want to see a sample distribution tax statement.
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  • I have the above issue but if i add in the "AMIT Cost Base Net Amount", as it is called on my particular Annual Tax Statement, whether an increase or a decrease, into the "Tax Deferred Amount" field in the Div/Dist screen i get an incorrect Total Income/Net Dividend Amount by the amount of the AMIT Cost Base Net Amount entered.
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  • I’m frustrated
    From Vanguards website.

    What is the attribution managed investment trust (AMIT) regime?
    AMIT is a significant industry-wide reform, which introduces new concessional tax rules for managed investment trusts. Under the AMIT regime, you will be assessed on the taxable income that is attributed to you by the fund, regardless of the amount you actually receive.

    What are the main differences between annual tax statements and AMMA statements?
    In the past, the annual tax statement provided cash distribution amounts and you were generally taxed based on the amount of cash distribution you received from the fund. The AMMA statement provides attribution, cash distribution and cost base adjustment information. The amounts that you will be assessed on and which are required to complete your tax return are based on the attributed amounts. The components required to complete your tax return are shown in Part A of your AMMA statement. The components of the cash distributions you received and the components attributed to you are detailed in Part B of your AMMA statement.

    What does AMIT cost base net amount—excess represent?
    Where taxable income attributed to you is less than the cash distribution you received, the difference will decrease both the cost base and the reduced cost base of your units in the fund. The decrease in the cost base of your units in the fund should be taken into account upon disposal on the units when calculating your capital gain/loss position. The reduction of cost base of the units in the fund may give rise to a capital gain if there is insufficient cost base to absorb the reduction.

    What does AMIT cost base net amount – shortfall represent?
    Where taxable income attributed to you is more than cash distribution you received, the difference will increase the cost base and reduced cost base of your units in the fund. The increase in the cost base of your units in the fund should be taken into account upon disposal on the units when calculating your capital gain/loss position.
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  • Hi All,

    To handle these two new components, we are thinking of adding two new fields to our payout form called AMIT cost base net increase and AMIT cost base net decrease.

    These components would not be included in the gross amount of the payout.

    If you add an AMIT cost base net decrease, we will treat this in exactly the same way as our existing Tax Deferred amount that Matthew mentioned above and essentially create a Return of Capital transaction behind the scenes that would reduce the cost base of each share parcel.

    In the unlikely scenario that the cost base of any share parcel reduces to $0 we would generate an immediate capital gain record for the difference as we do now with Return of Capital transactions.

    If you add an AMIT cost base net increase, we will look to add pretty much a reverse tax deferred amount as Matthew suggests.

    The complicated part for us will be this reverse tax deferred amount.

    Here's where the new field will appear on the payout form:



    Pending feedback on this topic we will look to start this work next week.

    Let me know your thoughts.
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  • I think that sounds good.

    The end game is that the net increase/decrease is applied to cost base for when calculations surrounding disposal of units takes place and is reflected in the CGT report, which I believe your proposal will perform.
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    • Thanks Matthew,

      I'll jump in and take a look as soon as you fire it through
    • Hi Paul,

      I think your correct, the location I first suggested for the components won't work. After reviewing a few more statements and other documents (thanks Matthew) we are going to adjust our intended approach slightly. Our alterations are subtle but they will ensure investors can capture both the tax components and also reflect the net cash amount actually paid correctly.

      I will post next week when we have something to show.
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  • Hi Ben,

    That all sounds sensible and I think Sally sums it up well. If the AMIT excess is greater than the cost base, then the net difference will trigger a capital gain tax event as per the ATO's guidance:

    CGT event E10:
    Once your cost base is reduced to nil, any remaining AMIT cost base net amount will trigger CGT event E10 and you will have a capital gain equal to the excess amount.

    In effect, the reduction in the cost base to nil means that you have fully recovered the cost of your asset, so that any extra amount applied to reduce your cost base is a return on your asset.

    Where you hold your interest in the AMIT as a revenue asset (and it is not a Division 230 financial arrangement), any excess AMIT cost base net amount remaining after reducing the cost of your interests in the AMIT to nil will be included in your assessable income.
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  • Hi, just wondering if you have an ETC for the changes to account for the new AMIT cost base changes. I saw the other related topic(https://getsatisfaction.com/sharesigh...) so it definitely looks like its being worked on, would just like an estimate of when these updates will be complete?
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  • This work is currently in progress. The AMIT decrease component is largely complete and tested, and work has started on the AMIT increase component.
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  • Hi All,

    Today we released the changes required for you to capture your AMIT cost base decrease and AMIT cost base increase components.

    The new AMIT decrease component operates a bit like the Tax Deferred component and reduces your cost base. The AMIT increase cost base does the opposite and increases your cost base.

    For performance reasons we add the AMIT cost base decrease component to your gross dividend given that it represents cash received that was not attributed to you.

    The AMIT cost base decrease is therefore an addition to your net cash received.

    For performance reasons we deduct the AMIT cost base increase from your gross dividend given that it reduces your attributed income to the net cash amount you actually received.

    I've done my best to show you an actual example of how to map the annual tax statement values (the layout of these change a fair bit between different ETF's) and our payout form using an example that has an AMIT cost base decrease.

    Note that in my example, the annual tax statement does not have the attributed franked amount net of the tax offset. To get this value I have deducted the tax paid from the attributed value 22870.71 - 7069.35 = 15801.36

    I hope you find the introduction of these two new components helpful


    IMPORTANT DISCLAIMER: I am not a tax advisor and I don't know your tax circumstances.
    • view 5 more comments
    • Hi,

      We have received and updated ETF distribution data for a number of Computershare ETF's, namely Vanguard, Russell and a number of iShares.

      We have also updated AAA, DJRE, STW and IFRA.

      We don't think we will be able to source data beyond these ones that we have already loaded.

      Because of the format of the data we receive, especially this year with the introduction of the new AMIT regime, we have had to manipulate the data somewhat in order to load it.

      So, I would still take the time to check the taxable totals we have loaded against your annual statement.

      The easiest way to do this at the moment is to utilize our 'show holding totals' option before running the taxable income report.
    • Great, thanks for confirming that Ben. I'll double-check my ETFs as per your comment.
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  • This reply was removed on 2018-09-10.
    see the change log
  • This reply was removed on 2018-09-20.
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  • Thank you for your efforts in implementing this change.

    However, I'm not convinced this is calculating correctly. I'm looking at my DXS tax summary and trying to make it fit.

    In this case, there is a net AMIT increase (although they have shuffled capital between the individual securities).

    The total of franked dividend, unfranked amounts (non-primary production + net capital gains) and non-assessable amounts tally correctly to the amount actually paid. However, when I include the AMIT increase, this is deducted from the net amount paid.

    I'm happy to share the statement with you if that helps.
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  • Hi Warren,

    I'm sure we can get your components to tally correctly. But it would be helpful if you sent your statement to support@sharesight.com and attention me. I've pushed through a couple dozen AMIT statements now into our system and so far at least they've balanced correctly.

    It's probably worth mentioning a couple of things in case in case these tips help. I'm assuming of course you are trying to punch the values into our payout form;

    1. Only tally the Taxable Income components. These are typically listed to the right of the statement. The non-assessble amounts should not display under the taxable column at all.

    2. To arrive at the attributable franked amount, you need to first deduct the tax paid/offset from the total taxable franked amount. We store the franked amount net of tax. You'll then see a franking credits field where you can enter the tax paid/offset component.

    3. The non-primary production taxable value goes into the unfranked field

    4. Sum both of the discounted capital gains components and enter those in the discounted capital gains field

    5. Sum the two capital gains (other method) components and enter those in the Non-discounted capital gains field

    6. Enter the AMIT CGT gross up amount into the CGT concession field

    7. Enter the total attributable foreign source income into the foreign source field

    8. Enter the tax paid on the foreign source field into the Foreign Tax Withheld field

    9. Enter the AMIT cost base increase into the corresponding field.

    In theory, if you follow these tips (some AMIT statements don't quite follow this pattern, but most seem to) you should see your Net Cash Distribution from the annual statement align with the Net Dividend on our payout form.

    The AMIT value represents the difference between the pre-tax value attributed to you and how much was actually paid to you. In your case the AMIT increase value represents the amount you were attributed beyond what you were actually paid. Therefore, deducting this value from the total attributable should align with the cash you actually received. In theory.

    Regarding your question about the Xero API, we do cater to the two new AMIT components. See the screenshot below showing an example for an AMIT Cost Base Decrease



    Regards
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  • Ben,

    The Managed funds send their distributions quarterly. The Vanguard distributions are automatically recorded in ShareSight as Unfranked Dividends. The Vanguard quarterly distribution statements show the amount as "Other non-attributable amounts". This is described in the notes as "This amount relates to cash distribution and other entitlements from the fund that exceed the attribution amount."

    Only at the end of the financial year is there any tax information. This AMIT tax statement balances with the sum of the four quarterly distributions.

    How should these quarterly distributions and annual tax statement be recorded so that we are not doubling up on tax and distribution performance?
    • Hi,

      Ideally you would update your quarterly distributions with the end of year tax detail, but pro rated across the distributions in related to the amount of cash received.

      Given we don't get accurate end of year tax details for Managed Funds this process is a little more involved than for Vanguard ETFs.

      At the end of this process, I wouldn't expect you to have any record of 'Other non-attributable amounts' for example as these values will ultimately be reflected in the AMIT adjustment components, either the AMIT cost base increase, or AMIT cost base decrease.

      Updating your quarterly distributions in this way will mean your cash position during the year is accurate for performance reasons, your tax detail is correct for use on the taxable income report and your cost base will be adjusted according to the AMIT adjustments recorded on your annual statement which will become relevant for cgt purposes when you sell any units.

      An easier approach is to simply delete the first three distributions you received during the year and then update the final distribution with the correct tax detail. Assuming you enter the tax detail correctly and the AMIT adjustment, your net cash amount should match what you received during the year.

      The downside of this approach is the impact this has on your performance if you run your performance report across only portions of the tax year.
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  • Hi Ben

    Just verifying how the Taxable income report shows up with the auto-generated ETF trust data and also after I've adjusted the distribution amounts, and there's some discrepancies I'm hoping you can help with

    I've chosen VAF as the ETF, and when I look at the auto-generated ETF distribution amounts in the taxable income report(highlighted as AUTO), it seems ok, except there seems to be some sort of tomfoolery going on with both AMIT Decrease and AMIT Increase, which doesn't match what I have with my tax statement, which only has an AMIT Increase figure and no AMIT decrease.

    So what I've done is I've taken the numbers from my tax statement for VAF(Interest of 782.15, Foreign Source Income of 102.46, and AMIT Increase of 43.38), and adjusted all the distributions for the tax year as per the ratio of the distribution payment for the year(highlighted as ADJUSTED). eg. I received quarterly distributions of 171.57, 251.78, 202.09, and 215.8, resulting in a total distribution for the year of 841.24. For the first distribution, I multiplied the ratio of the first payment(171.57/841.24) with the annual numbers from the tax statement to get the numbers for that first distribution, an interest payment of 159.52, foreign source income of 20.90 and AMIT Increase of 8.85. This can be seen in the screenshot of the payment screen attached. AS the distribution payment screen shows, it shows a net dividend of 171.57, which matches the first distribution. YAY, looks like the calculation works!

    However, when I look at the ADJUSTED taxable income report for that ETF, it shows the net amount as 172.51. That doesn't seem right, shouldn't that show up as 171.57 which is what shows on the payment entry screen? Same with the total income which also shows 172.51. The total annual amounts for Interest, AMIT Increase and Foreign Source Income matches what my tax statement shows, so shouldn't the net amount calculate to the actual $ amount of what was paid to me?





    • view 6 more comments
    • Hi,

      We should see a fix for that totals issue rolled out either this afternoon or tomorrow morning. I'll post another update when the issue is resolved.
    • Hi,

      We have now released a fix for this issue.
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  • I would strongly suggest NOT deleting or re-entering distributions made earlier in the year. If there have been any tax deferred or AMIT amounts processed in those earlier distributions AND there has been a sale of any securities, then the previously calculated capital gain will be incorrect.

    A better approach is to wait until the tax/AMIT statement is received from the fund and then adjust only the last distribution so that the totals across all distributions agree to the tax/AMIT statement. There are two caveats with this:-

    - if the required adjustments are greater than the value of the final distribution, then you will have to go back and adjust earlier distributions any way;
    - if you have sold any units post any adjustment you will still need to recalculate the capital gain (and if you run your own accounting system or have Sharesight linked to Xero you will need to update the entries for the disposals concerned).

    None of this is difficult, it's just part and parcel of running your own book-keeping.
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  • Hi All,

    A few weeks ago, when it became apparent that we were not going to be able to source correct end of year tax detail from Link Market (apart from those few ETF's I've already mentioned) we started work on another feature that we thought might assist people get their tax detail updated in Sharesight.

    We haven't made any announcements to date regarding this feature as we weren't sure we would have the feature available before the end of October.

    However, as it turns out, we are in a position to release a beta version as early as tomorrow.

    We are keen to push this early release due to the clear interest from our users, not least some of you watching and commenting on this topic and the fact that the end of Oct is coming up quickly.

    This feature will allow you to pro rata your annual tax components across your distributions for the year and follows a couple of suggestions I have made on this topic over the last few days.

    We think this approach is a good one for at least the following reasons:

    1. Your cash position for each distribution will remain unchanged (subject to some minor rounding). This is important for performance reasons, DRPs and for reconciliation with Xero, among others.

    2. In order to enter the correct AMIT components and retain the same Net Cash Amount, you need to have correct Tax Details entered.

    3. For those of you who are considering making reference to our Income Tax Return section on the Taxable Income Report, you will need to ensure you have the correct tax detail entered for each ETF.

    4. We think this will also be useful for those with Managed Funds and Unit Trusts as well.

    This solution will not suit everyone. Some trusts balance up quarterly, in which case it's possible only the final distribution needs correcting. In addition, those utilizing our Xero connection will need to do some additional work to reflect the payout changes in Xero if desired. However, we hope some of you find it a useful tool.

    Here's a screenshot showing what the form looks like. Once live, you will be able to find it on the Taxable Income Report after selecting 'show holding totals'.

    I will post an update once we have rolled out the feature:

    • Ben,

      This is sooo good! Showing all the fields and being able to enter data from the annual AMIT statement just by running down a single column.

      Thanks very much to you and the team for coming up with such an elegant solution.

      Regards, Paul
    • Hi Paul,

      Thanks for the feedback.

      We are really hopeful this tool will prove useful to anyone with ETF's, Managed Funds or Unit Trusts.

      It's now even more important to get correct tax details into Sharesight with this new AMIT regime, particularly the AMIT adjustments and this tool should make that process a whole lot easier.
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  • In the past where there was tax deferred income or reduction in the cost base, that adjustment to the cost base you could view in the historical cost report under the heading 'capital adjustments'. I note that the AMIT cost base adjustments appear in the taxable income report but for the capital gains report, are you saying the AMIT cost base is automatically adjusted the cost base of the investment but this adjustment does not appear in the historical cost report under capital adjustments?

    Thanks
    Nick
    • Ben, I'm referring to the ETF (ASX: VAS) where there has been AMIT cost base reduction. Whilst it appears in the taxable income report, the cost base when I view the historical cost report, does not show a decrease in the cost base therefore, if I had sold that position the capital gains would be incorrect. I appreciate your advice.

      Thanks
      Nick
    • Hi Nick,

      At the moment the new AMIT components only affect your cost base when the distributions in question are confirmed.

      I think we need to alter this behaviour and make sure they alter a holdings cost base when distributions are unconfirmed as well. I will follow up with this and post an update on this topic when we've implemented this change.

      However, more generally we do encourage users to check and confirm their dividends and distributions.

      We've made checking distributions easier with our release today of a new feature that allows you to enter your annual tax detail and have the components pro rated across your distributions for the year.

      Although we have updated our VAS distributions with more accurate end of year data I would still encourage you to check our pre-populated values against your VAS annual statement. There are still discrepancies.

      To do this, run the taxable income report with 'show holding totals' selected. Then click on the new feature link you will see alongside the VAS totals for the year.

      It's worth pointing out that for VAS you will see both AMIT increase and decrease components. The end result should match the value you have on your statement.
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  • I have used the new feature that allows you to enter your annual tax detail and have the components pro rated across your distributions for the 2018 year for ASX: VAS and ASX: AAA. I confirmed all my unconfirmed transactions and then ran the taxable income report and updated each component within the new feature for both of the abovementioned holdings.

    Can you advise what I have done wrong as I have the follow issues:

    1. My Capital Adjustment in the Historical Cost Report for the last financial year and the current year are now over stated (cost base reduced too much), in fact there should not be any adjustment for the 2018 year;

    2. Looking at ASX: AAA I tried to make changes in the new feature after the inital change and the components update on the screen but once I save the changes is doesn't change in the taxable income report.

    Any help is appreciated.

    Nick
    • view 2 more comments
    • The issue with overstated (doubled up) capital adjustments has now been resolved.
    • Many thanks for the update and for the communication regarding this issue.
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  • I’m happy
    Just used the new Annual Tax Statement form in the Taxable Income Report and it is a great addition of functionality. Allows me to do away with an excel speadsheet - always good.

    Just be aware that for stapled securities you need to split out the div from the dist and create a second payment for each payment date i.e. one for the trust component and one for the company component, prior to using as the system doesn't do this automatically unfortunately. i.e. for LLC, SYD, TCL.
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  • Nice work on the AMIT distribution project. It seems to be working very well. There may still be a few tweaks to the tax component apportionment function but it's great to get all of this into production.
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