TFN Deduction for Income

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  • Updated 2 weeks ago
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Hi,
I have just recorded a dividend in Reckon Accounts Personal Plus 2018 which has a TFN deduction associated with it. I entered the gross amount of the dividend as an unfranked amount and the TFN deduction is then applied against this to create a reduced net dividend. I note that the TFN deduction results in a "MiscExp" transaction in the register but it does not seem to reduce the cash balance in the account of the TFN deduction.
When I view the account in Portfolio, the cash balance shown also includes the TFN deduction amount. I can sort of understand why it does this as the amount is not truly an expense, it has just been withheld until it can be claimed back.
My question is, what transaction do I apply in the register to claim the TFN deduction back when the time comes? If I just bring it in as income, how does the cash balance in the account know that the income relates to the TFN deduction.
I cannot access anything in help about how TFN deductions work.
Any advice?
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Dean Robinson

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Posted 2 weeks ago

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Diver Dave

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Not sure I completely follow you, Dean.  The TFN amount withheld is shown as MiscExp in the Action column but is Categorised as _TFN.  Which account do you say doesn't have it's Cash Balance reduced?  Did you enter the deduction as TFN Amount Deducted, or as a Miscellaneous Expense?

Entering the Gross un-Franked amount less the TFN deduction results in the cash dividend actually received.  I use a Linked Account, so the nett amount is then transferred out to the linked Chequing Account, leaving the Investment Account with a zero balance.

To identify the amounts withheld, run a Report for the Category _TFN. 

Can you clarify what you're seeing?
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Dean Robinson

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Hi Dave,
I used the "Record an Income Event" on an investment account to enter the transaction. As an example, I recorded $1000 as "Unfranked Dividend" which was the gross amount of dividend issued. I had $200 of withholding tax taken out of this and I entered this amount in the "TFN Amounts Deducted" field. I did not use the Misc Exp field and I did not transfer balance.
When I entered the event, it generated two transactions in the investment account register - the first was an action code = "DivUF" with amount $1000 and this increased the cash balance in the account by $1000. The second transaction had an action code = "MiscExp" but with a category of "_TFNdeduct" - but it did not reduce the cash balance in the account at all (which is what I was expecting).

The only way I can see to get it to do what I want is to instead use the "Miscellaneous" field of the "Recent in Income Event" for the withholding tax and specify an appropriate expense category.

I am trying to work out how TFN deduction field is supposed to work if you have a TFN withholding.

Does that help?
(Edited)
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Diver Dave

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Thanks for your prompt reply, Dean.  The TFN field is supposed to work by deducting the $ 200 from the $ 1,000.  Can't understand why that isn't happening.  I use the TFN field all the time as I have Foreign dividends with Withholding Tax deducted, but use the TFN field - never experienced what you have, though.

Something doesn't seem right.  Not sure what to suggest.  Maybe try Validating and Super Validating your file and see if that sorts the problem.
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John Campbell

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Based on recent experience, TFN deductions are not associated with your tax file number and so there may be a problem getting a credit for this.

Did you enter the miscellaneous expense as 200 or -200 ?

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Dean Robinson

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Hey Dave,
I double clicked on the TFN Deduction transaction in the register to bring up the entry window - just to see what the individual transaction contained. It looked ok with the TFN Deduction Amount and a negative amount for proceeds. When I clicked on "Enter/Done" the balance now incorporated the negative amount. All good. Weird - but fixed.
I will still run validation and super validation to just check the integrity of my file.

Thanks for your help.

Cheers,
Dean
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Diver Dave

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Glad you got it sorted, Dean, though very odd behaviour from Reckon.  Incidentally, re John's comment above, there should be no problem getting the TFN witholding back as the Dividend report from the company will highlight the deduction, presumably because you hadn't registered your Tax File Number with the Registrar - recommend you do that to avoid a deduction next dividend.