Investment Account

I would like to use Manager for managing the accounts for my investments that I buy, sell together with the associated charges for a discretionary trust.

I would also like to manage the tax payments made to the authorities due each year for notional dividends as well as payments made to beneficiaries for which a tax credit from the pool can be tracked.

Is this a practical proposition with manager. Most software I find is for performance monitoring which I do not need. I just want to manage inputs/outputs from the trust, tax payments/credits for notional dividends. I am happy to do the tax calculations off line and just record the transactions and report them on an annual basis.

Is this viable in Manager and is there a chart of accounts example available doing this sort of stuff?

Thanks for any advice or help in what other software might be available for a private investor

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Thanks, I feel a new project and learning curve for me coming on.

On quick question should asset holding be treated as inventory or fixed assets when I Buy shares?

Sorry if this is basic but I need to get started somewhere.


That is a question only you and your financial advisor(s) can answer. Both approaches can be appropriate. There have been many discussions about this on the forum. I recommend searching for them.

I have now read your forum and developed an accounting model that works fine.

I have one other problem to solve which I cannot find any topics on teh issue of accounting for notional income not received in the account. This income is taxed and payments need to be made from the account.

Can you please suggest a method for creating a BS account for these credits and how to track notional income not received in the account.

John Gallagher

How exactly are you defining notional income?

Investments pay dividends that can be paid as income or accumulated in the fund.

The tax authorities demand that tax is paid on all income whether it is paid out or retained by the fund manager to reinvest.

Thus the fund manager issues a certificate of income retained by them. This is notional as far as my account is concerned because money is never received but tax is paid.

Also when the investment is eventually sold a capital gain may be made but the income already taxed needs to be subtracted to calculate the actual gain. The sale proceeds will include the income retained.

I really I want to record these notional income amounts and the tax paid in the accounts. So when an investment is sold or proceeds received I can calculate an appropriate tax report.

Thanks for the explanation. What you are talking about as notional income really is not notional. It is actual, but has been reinvested rather than paid out. Accordingly, it affects the cost of inventory or the purchase price of fixed assets, depending on how you’ve determined you will treat securities held for investment.

As we dive deeper into this topic, and your questions get more specific, you may start to realize that Manager is not optimized for investment accounting. Can it be done? Yes. Is it convenient? Perhaps not. The answers will depend on the types of investments you make, how long you hold them, what your reinvestment practices are, etc.

The first question to consider is whether a double-entry accounting system, centered as it is around recording classical accounting concepts of assets, liabilities, equity, income, and expenses, is the best way to monitor investments. The program’s inventory capabilities are designed primarily to monitor purchase and sale of goods, including calculation of cost of goods sold, profit margins, and such. They are not ideal for monitoring capital gains. Fixed asset capabilities are designed around purchase and depreciation over time of capital assets used in a business, not (hopefully) appreciation of securities and recording of dividend or interest income, especially when reinvested in an account. In the end, you must ask yourself what you are getting for the expenditure of time and energy that you do not already get via reports from your brokerage. It is entirely possible there would be no marginal benefit for you.

Now, I expect other active forum members will weigh in with entirely different perspectives. And those will be equally valid for their situations. Some of them may have quite specific advice. I know there are several forum members who use the program for tracking investments. Let’s see what they have to say.

There is still some merit in having the basic numbers looked after and figures stored away in Manager. So Thanks.

I decided to create a ‘Notional income’ account and a ‘Notional Expense’ account in which to post the annual 'Notional Income figures.

I also created a BS asset Tax Pool account as a special account

I then do a tax calculation to determine what tax I need to Pay.

Finally I create a Purchase Order for the tax to be paid which create a liability in AP and an asset in the Tax Pool.

I then put the tax amount into the bank to make the payment

And finally I make a payment against the PO decreasing the bank balanced removing the AP.

This leaves the Tax Pool intact.

When I make a beneficiary Payment I will calculate the tax already paid and post a payment against the bank for the sum paid out and debit the Tax pool by the tax amount already paid in the PO.

If the investment people would like to look at this and give some feedback I would be most grateful.

I then create a purchase order for this amount with the Tax Authority as a customer. This amount is then a liability

Whatever you actually did, you did not do this. Purchase orders have no financial impact in the program on any account. Nothing you wrote about purchase orders made sense as a result. Did you perhaps create a purchase invoice? That should only have been done if you purchased something from a supplier on credit.

@Gally, your description of what you are doing was completely incomprehensible to me. You seem to be trying to use Manager in ways never intended, disregarding many principles of double-entry accounting and ignoring what various features actually do in the program. If this provides you what you want, then more power to you. But it sounds like it does not. I don’t think anyone is going to be able to offer useful advice until you adopt more conventional practices.

Of course you are right it was a purchase invoice I created hence the reference to AP. I did say I had a model working. This would not have been teh case with a PO.

In any event the notional tax due to the taxman is a form of credit which needs to be paid for by a PI.

The accounting model as described is working with a PI as I wrongly described as a PO.

Sorry for the confusion but I am not an accountant and a bit lax with terminology perhaps the use of control accounts might have been a clue to my mistake in the use of PO and not PI.

I went to my tax advisor today and he was superficially happy with my accounts in Manager and saw no need to move to an online version of ‘Quickbooks’ he uses with other clients. He is definitely going to look at the cloud based version of manager for his clients as the manager desktop version will work for his personal clients like myself with very minimal needs in investment and tax management.


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That accumulation in the fund can be called “Dividend Re-investment Plan” (DRP).

To take up a DRP you use a Journal Entry, such as

Your pretention that somehow DRP income is notional rather then actual is incorrect.
All income is actual, it just that some income is received in cash and other is received as additional script.

This is incorrect. Capital again is calculated between the DRP issue price and the selling price, the income and any relate tax doesn’t effect any capital gain calculation.

The same applies to cash paid dividends, they don’t affect capital gains.

I agree. Their post #9 is totally confusing.

Tax is paid on annual income, not per individual transaction within the year.

On re-reading, the confusion in part is due to the explanation terminology used.

When you have a DRP event you have two separate elements, the income and the receiving of script (inventory) which can be at different valuations - using the above Journal.

The P&L income (Dividends Franked) is 61.35. (Note: DRP income is not held in the BS)
The BS inventory (Stock Holdings) is 62.73. (The mismatch is held in a BS > DRP Balances)

It is the receiving of BS inventory (in lieu of cash) which triggers a future capital gains, not the dividend income itself. That can be illustrated with the following model:

Lets say you purchased 1000 units @ 4.00. The business pays a dividend @ 0.05 per unit.
Therefore 1000 @ 0.05 = 50.00. That dividend is always P&L income regardless of how the business decides to payout that dividend. They could pay you cash or issue DRP script.

Lets assume that the DRP is issued at a valuation of 5.00, therefore you would receive an additional 10 units (50.00 / 5.00). These 10 units are added separately to the BS > Inventory.

1000 @ 4.00 = 4,000.00 and 10 @ 5.00 = 50.00. You do not accumulate them into one inventory item such as 1010 @ 4.0099 = 4050.00, as each parcel (1000 & 10) would be separate capital gains events on disposal, besides being a lot less messy.

Imagine the capital gains calculations required if you wanted to sell only 500 units, would that be 500 of the original or 490 of the original plus the 10 DRP, especially if there is differing taxation rates due to the timing that each parcel has been held.