[GNC] Advanced Portfolio Report - Brokerage Fees

[Gilberto Reis Filho]

>>Just curious though. If your jurisdiction taxes gains but not offset by
>>losses, is that just for stocks/mutual funds or for all asset classes?

Several asset classes here are taxed. Rules differ on asset classes
though. Fixed income is taxed, but this one either on maturity or if
you choose to dispose of it before maturity. Here you cannot
compensate for losses as well.

For mutual funds tax is paid "at the source" (meaning the bank pays it
for you and decreases your shares accordingly either every six months
or whenever you sell shares) and you cannot compensate for it at
year-end. This is only for mutual funds

Stocks, ETFs and real estate funds you have to pay the tax monthly (if
you sell any asset of these classes), depending on the amount traded
(there is a monthly upper limit where you are tax exempt), if you have
capital gains. However, for these asset classes, you can compensate
for losses and decrease your capital gain basis for tax purposes. For
these assets the investor has to take care of the monthly tax payment
since brokerage firms are not obligated to do it for you. Brokerage
firms have an obligation to report to the government your trading
activities if they are above a certain value though. At year end you
have to report everything in your tax filing (your trades and monthly
tax payments).

Regards.

On Thu, Sep 14, 2023 at 11:53 AM Gilberto Reis Filho
<gilberto.reis.filho at gmail.com> wrote:
>
> >> 2. Record the tax split in the sell transaction directing it to a
> >> transitory asset account and then recording a separate tax transaction
> >> in the transitory account directing it to the tax expense account.
>
> >No, it not YET a "tax expense" but an asset. Maybe confused because both
> debit?
>
> In my country it is a tax expense at the moment you sell shares of a
> mutual fund. You cannot compensate for it when filing your tax report
> even if you lose money in the future. It is gone. Government calls it
> "exclusive taxation".
>
> >Only when you file your taxes determining the total tax you owe can you
> >tell what it will become. If the total amount held in all of the "tax
> >withheld" amounts is greater than the tax owed, part of that will become
> >"tax expense" and some refunded to you. If you have severe losses later
> >in the year maybe you get all of this back.
>
> That is not how it works here. If you sell, you pay at the time you
> sell. You cannot compensate for it afterwards.
>
> Just as a curiosity, in my jurisdiction you have to pay the tax when
> you sell and you have to pay tax semi-anually (if your mutual funds
> share price goes up you have to pay semi-anually even if you do not
> sell your shares). You cannot compensate for it either. The government
> accomplishes this by making the bank sell part of your shares to pay
> for this capital gain tax each semester (by this your average
> acquisition share price goes up and consequently your average returns
> go down).
>
> >Think of that money as being held in escrow by the government for the
> >purpose of paying taxes that MIGHT be due. In other words, they have
> >that much in hand against what you might end up owing and guaranteed not
> >having to try to collect it from you later at tax filing/tax due time.
>
> I understand what you are saying but this does not apply here.
>
>
> >Michael D Novack
>
> On Thu, Sep 14, 2023 at 10:34 AM Gilberto Reis Filho
> <gilberto.reis.filho at gmail.com> wrote:
> >
> > Yes, I know this works. I tried in two ways:
> >
> > 1. Record the tax split in the sell transaction directing it to the
> > mutual fund account (with shares and price recorded as zero) and then
> > recording a separate tax transaction in the mutual fund account (again
> > with both shares and price set to zero) directing it to the tax
> > expense account.
> >
> > 2. Record the tax split in the sell transaction directing it to a
> > transitory asset account and then recording a separate tax transaction
> > in the transitory account directing it to the tax expense account.
> >
> > They both "work", however complexity is increased and that is
> > something I am trying to avoid in this scenario. I am just wondering
> > if there is a more "efficient" way to do this.
> >
> > Thank you all for the insights.
> >
> > Regards.
> > Gilberto.
> >
> >
> >
> > On Thu, Sep 14, 2023 at 12:18 AM <devaps at asia.com> wrote:
> > >
> > > Gilberto,
> > >
> > > Instead of recording the taxes directly in the account register for mutual fund, you have to perform an intermediate step, such as -
> > >
> > > In mutual fund register, record the gross sale value with appropriate income split for capital gain, but instead of transferring the sale proceeds directly to bank, place it in a temporary account, say $Cash.
> > >
> > > Now open the $Cash account register and make a transfer to your bank with the net proceeds after including a split for the tax deducted.
> > >
> > > This should fix your advanced portfolio report issue.
> > >
> > > Cheers.
> > >
> > > ------------------------------
> > >
> > > Date: Wed, 13 Sep 2023 19:13:19 -0300
> > > From: Gilberto Reis Filho <gilberto.reis.filho at gmail.com>
> > > To: gnucash-user at gnucash.org
> > > Subject: [GNC] Advanced Portfolio Report - Brokerage Fees
> > > Message-ID:
> > >         <CACUWPYyVjsp4vXb9h-mPiaOyGNMA7oKjMcKDGMJyumwELdAGNA at mail.gmail.com>
> > > Content-Type: text/plain; charset="UTF-8"
> > >
> > > Hello.
> > >
> > > In my country whenever a person sells shares of a mutual fund the bank
> > > has to calculate and pay taxes, on behalf of the investor, on capital
> > > gains before making the funds avaliable to the investor. The investor
> > > receives the funds in the brokerage account liquid of taxes.
> > >
> > > I am recording these taxes in a split in the transaction where the
> > > shares sold are recorded, however doing this makes the advanced
> > > portfolio report recognize this tax as brokerage fees (well, they are
> > > not fees, but taxes).
> > >
> > > Is there any alternative to prevent this behavior and at the same time
> > > keep things simple preferably without having to create separate
> > > transactions?
> > >
> > > Thanks.
> > > Gilberto.