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Master Member
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We now have NWS shares and I understand that, as an American company, the dividends are foreign income (account 4170?) and the 15% US tax withheld is a foreign tax credit (account 4175?) so I was looking at the best way to record that. Looking at the cash receipt options, the normal dividend selection only applies to Australian shares with no options for foreign share dividends so the only applicable choice seems to be distributions - which then gives me the option to input foreign income and foreign tax credits.
I tried that out on the sample fund and it seemed to give the correct journal entries, ie:
Dividend: credit 4170 Foreign Income, debit 1101 Bank account
US tax withheld: credit 4175 Foreign Tax Credit, debit 2220 Foreign Tax Rebate
Since the payment is strictly a foreign share dividend, rather than a fund/trust distribution, it would be nicer if there was just a "foreign dividend" receipt type - however if this was the only niggle I would live with it.
The problem comes if you do a search in the Transaction reporter - the transaction is not showing up under either the dividend or distribution filters. To be more specific:
- I inputed a couple of distributions against a share asset - One using "Quick Add Distribution" and the other using "Cash Receipts", receipt type "Distribution"
- I did a report on "Whole Fund", "Cash Receipts", "All Transactions" and both transactions were correctly listed as:
CR00xx: Distributions: Distribution received for xxxx
- However, I did a report on "Whole Fund", "Cash Receipts", "Distribution" and neither transaction showed up
- A report on "Asset", "Cash Receipts", "Distribution" however, DOES list the transaction.
This is very dangerous - if I have a number of dividend statements, and I am not sure which one I have already put in, I would tend to do a report on "Whole Fund", "Cash Receipts", "Dividends" then "Whole Fund", "Cash Receipts", "Distribution" and then input anything that isn't listed - if I have already input something but it doesn't show up under the appropriate report it will get duplicated - BAD, BAD, BAD!
Another problem I had was I wanted to add a memo to the foreign income dividends. I worked out that I couldn't do this with "Quick Add Distribution" but I could do it with using "Cash Receipts", receipt type "Distribution". The trouble is that there seems to be two separate memo fields associated with the transaction - if you just "View journal entry" the screen has a memo box which just shows the standard dialog "Distribution received for xxx" and it is only if you choose "View additional information" that you get a screen with a different memo box showing the memo you have entered. This seems counter-intuitive - unless you remember you have put in a specific memo (in which case, you hardly really need the memo!) you won't go looking in another screen for it. It is also different from the dividends where, if you put in your own memo, it shows up in the memo box on the main "View journal entry" screen (and also appears as the same memo in the memo box on the "View additional information" screen).
This would not normally be a problem - I often use "minor edit" to add or change memos without reversing transactions - however it does not seem possible to edit dividend or distribution transactions!
So, to summarise:
1) The bug: the "distribution" filter in transaction reporter lists distributions only if searching by individual assets - not if searching by "whole fund"
2) The inconsistency: distribution transactions have two separate memo fields - the default entry in the memo box on the main "View journal entry" screen and the user input entry in the memo box on the "View additional information" screen whereas dividend transactions keep these two memos the same and allow user input into it - which is how it should work for the distributions as well IMHO.
3) A question: is the best way to enter foreign income dividends to use "distribution" or is there a better way that I missed (I realise I could always use general journal transactions - but that seems cumbersome and easier to make account selection errors).
4) A request: allow editing of dividend and distribution transactions - particularly a "minor edit" to just be able to change/add memos.
5) Another request: include "foreign income dividend" as a specific cash receipt type - similar to the regular dividend but so that the dividend defaults to the foreign income account and tax withwithheld defaults to the foreign tax credits account. (ie similar to the distribution but without all the extraneous distributions specific categories).
I should say that I only tried the distribution entries on the sample fund (I didn't want to replicate the problem on my main fund) - but I assume the problem would not be specific to the sample fund.
I should also say that I am currently running version 4.01. The reason for this is that I tend to input my fund info in large chunks and hadn't fired it up all through the 5.** versions so when I fired up it shows me that version 6.0.1 is available (which I have downloaded) - however the forums currently show there is still at least one unfixed bug (members position report) so I don't really want to update to 6.** till that is fixed (the various 5.** versions do not seem to be still available).
If any of this has been fixed/changed in the subsequent versions please advise.
Regards
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 17/05/2010 6:31:15 PM
Posts: 464,
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Hi,
Thank you for your post and providing this feedback.
Yes, foreign dividends (containing foreign income and foreign tax credits) are best recorded as distributions.
You can add additional receipt or payment types under System Setup > Payment and Receipt Types. Any new types added will appear in the selection boxes on the Receipt, Payment and Transaction reporter screens. However new receipt or payment types will not automatically trigger off specific actions such as posting amounts to foreign income rather than dividends received. For that reason this may be of little use to you at this point.
The reason for the dual memo field is that a distribution or dividend record can have a memo associated with it, and the transaction that is created to record the accounting effects of the event can also have a transaction associated with it. We will check what can be done to simplify this to just one memo.
We continuously work on improving the software, and you should update to the latest version whenever it becomes available. Some features that we refer to in answers to forum posts and emails may be unavailable in older versions of the software and may therefore not assist in solving specific problems.
Regards,
MySF
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Master Member
Group: Forum Members
Last Login: Today @ 4:28:21 AM
Posts: 107,
Visits: 1,364
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Hi,
Thanks for that clarification.
So, are you saying that if I update to 6.01 the bug:
The bug: the "distribution" filter in transaction reporter lists distributions only if searching by individual assets - not if searching by "whole fund"
will disappear?
Also, I imagine that the reason you do not allow editing of dividends/distributions is probably because of complications due to the specific actions triggered by these transactions - however wouldn't it still be possible to allow "minor edits" to just be able to change/add memos.
Regards,
Neil H.
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Master Member
Group: Forum Members
Last Login: Today @ 4:28:21 AM
Posts: 107,
Visits: 1,364
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I am now running 6.0.2, so when I get time I will check how the distribution filter is working.
However, in the meantime, I have encountered another problem/query.
NWS withholds US tax at 15% and the fund is set with the maximum foreign tax credit claimable as 15% - so there should be no problem - however when I go to process the distribution it tells me I am exceeding the maximum claimable tax rebate - and asks me if I want to proceed anyway.
So now I'm confused as to whether I should be putting the gross dividend or net dividend into the foreign income box - I had assumed it should be the net dividend since the whole amount is put to the bank account - but then why am I getting this warning?
To give an example:
Say NWS pays a gross dividend of $100 and witholds 15% tax ($15) then I get paid $85 net to my bank account.
I enter a distribution of $85 with $85 in the foreign income box and $15 in the foreign tax credit box. When I go to save, MySF warns me I am exceeding the maximum claimable foreign tax credit but if I proceed anyway it seems to give the correct journal entries, ie:
credit $85 4170 Foreign Income, debit $85 1101 Bank account
credit $15 4175 Foreign Tax Credit, debit $15 2220 Foreign Tax Rebate
if I were to put the gross $100 into the foreign income box, then I may not get the warning? but I would get the wrong bank account debit.
I realise that the gross dividend should be used in the tax calculation - but I had assumed that MySF adds in both 4170 and 4175 during the tax calc (similar to how the franking credits are processed?). However, I won't really see all that till the end of year rollover.
I would appreciate if you could confirm (or otherwise) that the net $85 payment is what should go into the foreign income box and tell me why I am getting the warning that I am exceeding the maximum claimable tax credit when both the credit and the set rate are both 15%.
Regards,
Neil H.
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MySF Administrator
Group: Administrators
Last Login: 17/05/2010 6:31:15 PM
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Hi,
This question was also asked and answered here.
Regards,
MySF
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