2018 BHP Share Buy-Back

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Note

BGL does not provide accounting or taxation advice. The following is designed to act as a guide for Simple Fund 360 users. It is not designed to be accounting or tax advice and should not be taken as a strict guideline. Other methods that are more suitable may be used instead of these steps.

Overview


The ATO have released the following: CR 2019/5 Income tax: BHP Group Limited - off-market share buy-back.

Details Amount per share
Dividend Component $27.26
Capital Component $0.38
Excess of the Tax Value over the Buy-back Price. $4.54
Sale Consideration $4.92

(capital component + excess of the Tax Value over the buy-back price)

Buy Back Price $27.64

Instructions


The following components will need to be calculated for the fund's holding of BHP shares:

  • Capital proceeds received (Sale Consideration)
  • Excess of the Tax Value over the buy-back price
  • Dividend
  • Capital component of sale consideration

After this, a journal will need to be posted to process the share buy back

Example


A fund with 1,000 BHP shares participated in the buy-back

The components of the transaction are calculated as:

  • Capital Proceeds: $4.92 x 1,000 = $4,920
  • Excess of Tax Value: $4.54 x 1,000 = $4,540
  • Dividend: $27.26 x 1,000 = $27,260
  • Bank receipt of buyback price: $27.64 x 1,000 = $27,640

The following journal will need to be posted in Simple Fund 360:

Account Name Account Code Units Debit Credit
BHP Securities 77600/BHP.AX 1,000   $4,920
Investment Expense 37500/BHP.AX N/A $4,540  
Dividends Received 23900/BHP.AX N/A   $27,260
Bank 60400/Bank N/A $27,640  

 

Investment Expense

This Investment Expense account had the Tax Label set to Not Applicable - Permanent Difference. See Non-deductible tax expense for more details on changing this.

If you wish to create a new account to record this permanent difference, please refer to Add an Account

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2 comments
  • When downloading or printing this topic (useful as a workpaper) the journal entry doesn't show the 77600/BHP part of the journal. It only displays the Investment Exp, Div Received and Bank.

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  • Hi Carmel, thanks for the heads up. We've updated the export, you should now see the BHP entry as well :)

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