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MySF Administrator
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This article details the process to follow to enter the demerger between AMP and HHG as occurred on the 23rd of December 2003 into MySF.
As the process of the demerger involved a cancellation of a number of AMP Shares, a payment for this cancellation and an allocation of HHG shares, the way to input this information into MySF Manager is through a Sale, Purchase, Split process, which need to be done in that order.
You do not use the Demerger function in MySF for this transaction.
The example that follows contains information based on a document issued by AMP to Shareholders. Section 1 of the document is titled: “Information to assist you to determine your tax implications as a result of the AMP demerger”
There are three steps to follow: recording a Sale of the number of Shares that were cancelled, for the sale per unit price of: $5.9142, recording a Purchase of the appropriate number of HHG Shares, and recording a Split of AMP so that the number of AMP Shares owned at the end of the procedure is the same as it was at the start.
It is important that the same bank account be used for both the sale and the purchase transactions described herein.
This example assumes the following:
The fund holds a single parcel of 1065 AMP Shares, which were purchased on the 3rd of June in 1998 at $18.60 per unit (total capitalized cost of $19,809.00).
( Step 1 )
Record the sale of AMP shares. This is done to record the Cancellation of a number of AMP shares, subsequent Cancellation Entitlement received, and the Capital Gain / (Loss) associated
Go to the Managing Assets > Sell a Financial Asset > Shares (or the appropriate category for AMP)
On the Sales screen, select AMP from the dropdown box near the top left. The number of units that were cancelled is 29.1947766% of the shares that were owned, rounded to one decimal place. In this example, (1065 x 0.291947766)= 310.9 units. Please check your information from AMP to ascertain the exact number in your case, it is shown in section (c) of the document sent by AMP.
Enter this number (310.9) into the ‘Number of Units’ field.
Into the ‘Sale Price’ field, enter: $5.9142, leave the brokerage fee as $0.00. Date of the Sale should be 23rd of December 2003. For the number of units being designated for sale in each line, enter a total number as shown in (c), in the case of the example, 310.9
(Please note: if there is a Capital Loss at this point, you may wish to allocate the number of Units across the lines in such a way, so as to maximise the Capital Loss, therefore being able to offset a larger loss from this process against any Capital Gains there may be from Sales in the same Asset Class during the same Financial Year.)
This will now show the amount of Capital Gain or Loss at the bottom of the screen, next to Totals. In the case of this example, there is a Capital Loss of $3,944.02. This should match the amount under section (i) of the document from AMP.
Click Process.
What this has done:
- dropped the number of AMP shares, to show the cancellation
- added the ‘Cancellation Entitlement’ – in the example $1,838.72 – to the Bank Account selected
- created the entry for Capital Gain / (Loss)
( Step 2 )
Purchase entry of HHG Shares, using the amount received for ‘Cancellation Entitlement’
Go to Manage Assets > Add or Manage Financial Assets > Shares (or the appropriate category for HHG Shares)
Click on Add New, select New Purchase.
Enter the ‘Code’ as HHG, and enter the ‘Short Name’ and ‘Name’ as appropriate.
Select the same bank account to use as in Step 1. (Note: we are placing entries against the Bank Account which cancel each other out. For Audit purposes if you wish you can use the Transaction Reporter to enter a minor Edit of the transaction and put in an explanation into the Memo field of the Journal. This will need to be a separate step once all transactions have been entered)
The ‘Cost per Unit’ is shown in section (k) of the document, and can be calculated using the following process:
HHG cost per unit = Cancellation Entitlement / Number of HHG Shares received.
In this example, the ‘Cost per Unit’ for HHG is ($1,838.72 / 1,065 units) $1.7265.
The entry for ‘Number of Units Purchased’ should be the number of HHG Shares received, in this example 1,065. This number is shown in section (k) of the document.
Leave the ‘Brokerage Fee’ as $0.00, and for ‘Transaction to Generate’ select ‘General Journal’
Click Add.
You may see a prompt for automatically adding an HHG business card; you should usually answer yes to this question.
What this has done:
- HHG asset has now been created
- ‘Cancellation Entitlement’ amount has been moved to the account created for HHG, bringing the Bank Account back to what it was before the demerger process.
( Step 3 )
The final step is to enter a Split for AMP Shares, so that the number of shares owned after the Demerger process is the same as it was before.
This can be done through Housekeeping > Utilities > Splits.
Select the appropriate category for AMP Shares, and select AMP. Enter the Date as 23rd of December 2003. The ratio of the split should be 1 : 1.4122
In the line(s) below, you should see the ‘Number of Units after the Split’ displayed totalling the number of shares originally owned in AMP, in this case 1,065. Once again, there may be a slight discrepancy, due to rounding.
Click on Process, and confirm.
This concludes the procedure, by returning the total number of shares in AMP to the number before the demerger, in this case 1,065.
If you wish to check that all has been processed correctly, do the following:
- check the number of HHG shares owned, and the number of AMP shares owned. This can be seen under ‘Ownership Record’ in the ‘Additional Information’ section of the ‘Manage Financial Asset’ screen for the appropriate category. AMP should total to the same number as was held before the demerger (in this example 1,065), HHG should total to the number of shares received in HHG (also 1,065 in this example).
Any income from ‘Rights not taken up’ (section (n) in the document) should be recorded as a Cash Receipt for AMP.
The numbers used in this example have been checked against the AMP demerger calculator, located on the ATO Website, at:
http://www.ato.gov.au/individuals/content.asp?doc=/content/45400.htm
The only difference between the numbers used in this example and the ATO calculator results from roundings performed on the ATO calculator and on MySF Manager.
Note: There may be a few cents left over in the bank account used when the process is completed, this is normal, and is once again due to rounding.
Regards,
MySF
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