How do I manually rebuild a cost base for listed shares in IPS?

Where a client has purchased a parcel of shares sometime in the past you may need to manually recreate the cost base in IPS to facilitate performance reporting and CGT analysis.

Recreating the cost base involves a combination of manually entering transactions for all buys and sells in conjunction with running Corporate Actions to automate the creation of any income received, dividend reinvestments or other corporate actions.

Recreating the cost base

1. Create a new account and set the account to 'Allow Corporate Actions'

2. Manually enter all buy / sell transactions

3. Run any corporate actions in date order

Step 1: Create a new account and set the account to 'Allow Corporate Actions'

1. Portfolios > Admin > Cash & Accounts and create a new account

2. Set 'Include in Corporate Actions' to 'Allow'.

• Allow application - will create the income and reinvestment transactions and will also create transactions in a separate cash account to show the movement of income and capital cash
• Allow application but deny income cash - will create the income and reinvestment transactions and will also create transactions in a separate cash account to show the capital cash movements but will not create transactions in the cash account for the receipt of income
• Allow application but deny capital cash - will create the income and reinvestment transactions and will also create transactions in a separate cash account to show the receipt of income but will not create transactions to show the movement of capital cash
• Allow application but deny income cash and capital cash - will create the income and reinvestment transactions but will not create transactions in a separate cash account for receipt of income or capital cash movement.

Allow application but deny income cash and capital cash is most frequently used as either the cash account transactions are being received into XPLAN via a separate datafeed (eg. Macquarie Cash Account) or the cash account is not managed by the adviser and once the income has been paid out to the client it does not need to be monitored via IPS.

Note: If adding the share holding to an existing account, you can check or update the corporate action status from here:

Step 2: Manually enter all buy / sell transactions

1. Portfolios > Transactions select Purchase or Sell

2. Manually enter the buy/sell transactions. If entering multiple purchases for the same holding you can use the Save and Next option

Note: Buys and sells entered manually should relate to contract note purchases or sales only. Any addition of shares due to dividend reinvestment or a buy back or purchase plan will be created automatically by the corporate action in the next step

Resultant transaction history showing all buys and sells:

:

Step 3: Enter the reinvestment percentage if applicable

1. Portfolios > Position > Edit Holding details

2. Set the reinvestment percentage. If all dividends are being reinvested set this to 100%

Step 4: Run any corporate actions in date order

1. Portfolios > Corporate Actions 

2. Select the account and / or search for holding. Set the timeframe to since inception if running corporate actions since the original purchase date.

3. Sort corporate actions by date by clicking the 'date' column heading

4. Tick the corporate actions to include and select "Execute"

Note: Multiple dividend corporate actions can be executed at once. As the dividend is calculated based on the number of shares held at the time that the dividend was issued, it is important that any other Scheme Option or Other Corporate action that may impact on the number of shares held is run before running any subsequent dividend actions.

In the below example, dividends up until the 1:5 In-Species Distribution of Sca Property Group Entitlements (WOWXE) on 26 Nov 2012 were run. Then the 1:5 In-Species Distribution of Sca Property Group Entitlements (WOWXE) is run. This creates the WOWXE holdings in the client's account. Then the 1:1 Conversion of WOWXE Entitlements to SCP Ordinary shares on 11 Dec 2012 can be run. If the 1:5 In-Species Distribution of Sca Property Group Entitlements (WOWXE) is not run then there are no WOWXE holdings in the portfolio so the corporate action for 1:1 Conversion of WOWXE Entitlements to SCP Ordinary shares will not be available.

Once the 1:1 Conversion of WOWXE Entitlements to SCP Ordinary shares is run, the additional corporate actions for the newly create SCP holding appear in the list of available actions.

You can see the implications of running the corporate actions in the list of transactions under the portfolio. 

An income transaction for Distribution Entitlement is created which shows the income earnt

If reinvesting a Distribution Effect Positive transaction is also created to show the purchase of the additional shares.

What if the result is incorrect after running the corporate actions?

Any corporate action can be 'reversed' and the transactions previously created will be removed from the portfolio. The reversal should also occur in date order.

Tip:  When recreating a cost base it is generally recommended that you check the portfolio and transactions at regular intervals to confirm that the actions are resulting in the outcome you expect.