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Regular Member
 
Group: Forum Members
Last Login: 7/01/2012 5:57:22 PM
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Hi Neil H.,
Thanks for the link, it makes even more sense and poses more questions
When dealing with the year end Tax Instalment you note a Clearing Account, is this a bank account or an in fund/dummy account to help process this transaction?
Regards
Remp
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Master Member
Group: Forum Members
Last Login: Yesterday @ 11:47:51 PM
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Hi Remp,
The clearing account is just a dummy account that I use. I find it useful for a number of transactions - typically when cash payments do not necessarily coincide with the underlying fund transactions. A couple of examples for me:
1) A share purchase plan where I am applying for a number of shares but expect that the allocation may be scaled back. My approach:
- When I make the application and pay the money, I do a payment from the bank account to the clearing account.
- When the company issues the shares and a refund for the scale-back, I purchase the shares from the clearing account and pay the refund amount from the clearing account back to the bank account.
The main advantage for me is that the correct transaction dates show for the share purchase and for payment out of and refund back to the bank account.
2) I sell a number of personal share parcels to the fund and instruct the fund to retain some of this as a personal contribution. My approach:
- The shares are bought with payment made from the clearing account.
- The personal contribution is made with payment to the clearing account.
- The cash payment to the member for the balance of the purchase price is made from the bank account to the clearing account.
I should say that there may well be other ways to handle these transactions without using a clearing account - but I find it a convenient way to handle these (and several other) sort of transactions.
Of course, as a dummy account, at the end of the day the clearing account should always balance out to $0.
Disclaimer: I am NOT an accountant - if you want to know if a clearing account is a suitable way for you to handle any of these transactions you should check with your accountant and/or auditor.
Regards
Neil H.
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Regular Member
Group: Forum Members
Last Login: 7/01/2012 5:57:22 PM
Posts: 21,
Visits: 177
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Hi Neil H.,
Thanks for your prompt reply.
The detail you have provided is very useful, and assisted me greatly in understanding the processing of year end Tax instalments. Thanks again.
Regards
Remp
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