When acquiring equities, you may incur brokerage fees. These fees form part of the cost base for capital gains tax (CGT) purposes, and therefore should be included in the total acquisition cost.
The method of handling GST including in the broker fee depends on whether or not your fund is registered for GST. (Refer to 184.108.40.206 below)
For example, if you purchased 1000 Telstra Shares on 17th February at $4.84 per share, and you paid a broker a $15.00 fee, the total cost to enter would be $4855.00.
The unit cost shown in the Assets table after completion of the entry would be $4.86, and Market Value would correctly display the share price on the day of purchase, being $4.84.
Mclowd will show an unrealized loss of $15.00, being the broker fee.
Note that Mclowd has recorded a total value of $4840.00, being the price paid for the share parcel, excluding the broker fee.
220.127.116.11 Accounting for GST on the Broker Fee
If you pay a broker fee to acquire direct equities, it is likely that fee will include GST.
If your fund is registered for GST, you can reclaim the GST component of the broker fee, and therefore it does not comprise part of the cost base for CGT purposes. You should therefore deduct the GST portion of the broker fee before entering the total package cost for the shares. In the example above, 1000 Telstra shares at $4.84 each cost $4840 plus $15 broker fee, but the broker fee included $1.36 GST, so the total package price is $4853.64.
The shares therefore cost $4.85 each and the unrealised capital loss is $13.64.
The GST component of the cost can be entered separately through the Expenses tab, paid from the bank from which the payment for the share purchase was made, and allocated to 2-1000 GST Paid.
The Bank report will show two transactions, being $4853.64 paid for the share package and $1.36 paid in GST, correctly totalling the $4855 paid out.
At the close of the BAS accounting period, you will create a journal entry to credit the total amount in the GST Paid account to Account 2-1000 and debit to GST Clearing, then proceed with other entries as required to complete your BAS return (Refer to Account Maintenance – Section 9.5.1).
NOTE: If your fund is not registered for GST, you should simply include the GST component of the Broker fee in the total paid for the share package, as GST paid and not recoverable forms part of the cost paid for the shares for CGT purposes.