platform fees - tax voucher

dave209's Avatar

dave209

03 Aug, 2019 09:13 AM

Hi I am setting up MoneyDance 2019 to help with my income tax return especially concerning my shares and unit trusts. I have existing unit trusts and shares which i have entered as securities into investment accounts using "BuyXfr transactions with the category "Initial Holdings" as a custom income category" as mentioned help: entering-holdings.
What i now need to represent is the share platform charges. These are taken from the security from its dividends. Therefore the platform charges are seen as "income" for tax purposes for which i receive an annual tax voucher.
Any ideas how i can represent this "income" so that i can later report upon it in the tax return? I should also indicate the name of the security and number of shares in the same report. Thanks.

  1. 1 Posted by dave209 on 28 Aug, 2019 05:34 PM

    dave209's Avatar

    No response to my query. Not much by way of examples in the help documentation.
    I have decided to do following:

    Add the security to investment account with action = BuyXfr - with 5 April 2018 as notional date as i am not interested in historical recording.
    I am interested in recording the investment for compiling the tax return.
    Add dividends paid by security as action = Div against the Security concerned.
    Add any platform fees as action = Xfr with -ve figure in Amount column. Moneydance then records this against the cash ledger for the investment account.

    I am told the tax return needs to report the number of shares in each security and the total dividends paid by the security during the tax year.

    The only way i could work out how to do that was to combine 2 investment reports:
    The "portfolio" report to provide totals of shares in each security on particular end date = end of tax year.
    The "investment performance" report which lists total dividend payments against each security between start and end dates.
    Does not seem to be a way to combine these reports into a custom report.
    Are there any possible problems with the above approach?

  2. 2 Posted by Stuart Beesley on 30 Sep, 2019 08:38 AM

    Stuart Beesley's Avatar

    Hi, I have the same needs as you.. a couple of questions first:
    - are you a U.K. tax payer?
    - are your investments normal dividend paid out, or accumulation funds?
    - presumably you want to record the whole dividend and not just the platform charges taken?

    SCB

  3. 3 Posted by dave209 on 01 Oct, 2019 12:05 AM

    dave209 's Avatar

    Answers:
    uk tax payer? = yes.
    investments dividends or accumulation funds? = both.
    record whole dividend not just platform charges? = primarily the effort is to ensure the dividend is recorded so that it can be declared upon the tax return.

    Since my original reply i have decided to record the dividend with action = DivXfr as this allows me to assign a category = "Investment: Dividend" and also transfer = to an existing bank account. I can mark the category as Tax enabled and then set a report to the tax year. The dividend shows up in "investment performance" report.

    On some platforms the platform charges are being set off against both cash in the account, and sale of shares and frankly i find it too time consuming to work this extra information into a moneydance investment account - requires sale of small numbers of shares etc.

    It would be easier if the platform would just invoice it. Perhaps it is harder for them to hide the actual cost if they did that ...

  4. 4 Posted by Stuart Beesley on 01 Oct, 2019 06:28 AM

    Stuart Beesley's Avatar

    Hi. My comments:
    - Accumulation units are a pain in MD!
    - Div / DivXfr is the correct way to report dividends on normal units
    - DivReinvest is the most correct way to record Divs on Acc units. Followed by a small sale and then miscExp if you want to record the platform charge and keep the fund units correct. This way you have a chance of keeping the capital gain report correct too.
    - can I ask what you are using MD for? Are you properly tracking bank accounts and loosely tracking funds, or visa-versa etc? I suspect the former?
    - I’m confused that you are saying you need to know about platform charges for tax as IMHO these are irrelevant for tax. Only the actual dividends are important. You can’t even use platform charges to reduce the tax due on dividends.
    - if you are only loosely tracking investments and don’t want to bother with buy/sell units on funds then I suggest as follows:
    >> don’t use investment accounts
    >> create an asset type account for each platform. I do this for tax free ISa and Sipp type accounts where the transactions don’t matter.
    >> every quarter or whenever you get a statement update the balance using a single adjustment transaction to the new total value. The category can be to a ‘junk’ category.
    >> every time you have a dividend just enter it as a balance adjustment using a tax flagged category
    >> ignore the platform charges.

    If however you want proper tracking of funds you don’t have much choice but to use div / divreinvest and then sell units where necessary for sale due to platform charges followed by a MiscExp or Xfr for the charge.

    Regards Stuart

  5. 5 Posted by dave209 on 01 Oct, 2019 07:56 PM

    dave209's Avatar

    you've made some good points. perhaps they could update the help with some worked examples? at the moment it is very much add, check register, check reports, amend, check, try something else. Inefficient + I dont have the spare time.
    You are right about usage of MD - loosely tracking shares and unit trusts / securities but that cos its too time consuming putting some of these transactions on - its easier to get the info online on the platform website.
    As for platform charges i was spurred to mention them because you mentioned them in question 3 in reply 2 "..and not just the platform charges taken?" and yes they are not relevant to tax return so i wont be recording them.
    I think i will keep with Investment Account and adding securities + dividends to that.
    Yes it wont be accurate but tbh the platform fees are mostly eating any gains from stock price increases these days.
    I will be moving platforms shortly so having securities list in investment account may help to keep an eye on the sale or transfer of the securities as they move to the new platform.

  6. System closed this discussion on 31 Dec, 2019 08:00 PM.

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