Splitting a portfolio

[amsadl]

Sorry I'm still confused about the "Transfer Between" function.

So what I want to do is to basically create 2 new portfolios, and transfer 45% of each investment to one portfolio and 55% of each investment to the other. The shares are currently held in joint names, and are now to be split between the two holders into separate holdings. Each parcel needs to be split accordingly so that in the future, when a share is disposed of, the capital gain will be correctly calculated using the FIFO method.

I've tried the "Transfer between" function to do this, but it doesn't seem to transfer in a way which will give the correct calculation of the cost base. Am I missing something? I can see how it would be fine if you use an average cost for capital gains calculation, but it seems to me that it won't be able to calculate on a FIFO basis.

For example. If I have shares in Telstra:

100 bought in 2005 @ $5
50 bought in 2007 @ $7

I want to transfer 83 shares to new portfolio A and 67 to new portfolio B as follows:
55 to new portfolio A and 45 to new portolio B with cost base of $5
28 to new portfolio A and 22 to new portfolio B with cost base of $7

So that in the future when selling Telstra shares from either of the new portfolios, the CGT can be correctly calculated on a FIFO basis.

It seems that the 'Transfer Between' function would take the oldest 83 @$5 for portfolio A and then put 17 @5 and 50 @7 into portfolio B. The FIFO calculation will then be different for the two portfolios.

I don't think the Australian tax office will accept an average cost calc.

[Mark]

Hi amsadl,

I apologize for the delay in replying to your question. Somehow the email notification about this new post did not make it to us.

Good point. Yes, you are correct in what you've described. The "Transfer Between" wizard uses FIFO to transfer the first set of un-sold shares until it transfers all the share quantity you've requested in the wizard. The best solution I can think of is that you will need to record the transfers yourself, instead of using the wizard. To help make this easier, you can use the "Open Lots" report on the original account. Under "Options / Report Preferences... / Open Lots", make sure to add the "Tax Basis" field to the report. You can then see all your un-sold lots, and what the basis value/date is for each. Record your 2 transfer out transactions in the original account, one for each new account, and then 2 transfer in transactions in each new account.

You could only create 1 new account, and transfer out shares for "portfolio A", and whatever is left would be the new "portfolio B". Instead of have 3 sub-portfolios (old, A, B), you would have 2 (old (rename it to B), and A).